Understanding EU Files  EU Deforestation Regulation

Deforestation is defined by the clearing of forest to make way for agriculture.

Degradation refers to structural changes to natural forests, including the conversion of primary forests or naturally regenerating forests into plantation forests or other wooded land.

Products in scope include wood, rubber, palm oil, soy, cattle and coffee as well as a range of derived products such as leather, chocolate, furniture and tyre.

Companies placing or exporting the products in scope in or from the EU market will have to conduct due diligence to confirm that the products have not been sourced from land which was deforested or degraded after 31 December 2020. Companies will also have to verify that these products are compliant with relevant legislation of the country of production, including respect for human rights, and the rights of affected Indigenous Peoples.

The legislation applies to all sectors and company size, though larger businesses will have to follow more stringent rules. Having been delayed twice, the legislation is set to apply from 30 December 2026 for large companies, and 30 June 2027 for SMEs.  

Under the amended legislation, organisations may be categorised as operators, downstream operators or traders, depending on their role in the supply chain. Operators export or place products on the market for the first time, whereas traders buy and sell products that have already been in circulation before. Meanwhile, companies can be upstream or downstream operators depending on their location within the supply chain. Upstream actors are those primarily involved in production, such as farmers, forest owners, logging companies or importers introducing goods to the market. Downstream actors are further down the supply chain, for example processors, manufacturers, wholesalers or retailers.

For large businesses

Upstream operators will have to commit to exercising due diligence on their products, including submitting a due diligence statement via the EU’s Information System before placing a product in market, and keeping this documentation on record for a five-year period. They will also be required to publicly report annually on their due diligence performance. Operators must pass on their due diligence statement number (generated by the Information System) to their direct downstream buyers for traceability.

Downstream actors have to collect and keep certain information on their suppliers and buyers for at least five years, and show this information to Competent Authorities, which are bodies that are responsible for implementation and enforcement of this regulation, on request. They do not need to carry out due diligence or submit due diligence statements, but they do need to register in the Information System.

For SMEs

Upstream operators still have to commit to due diligence obligations, but rather than submitting a due diligence statement for each consignment or transaction, certain SME operators can file a single simplified declaration in the Information System, which would then apply to any future consignments covered by it.

Downstream operators do not have to register in the Information System or verify upstream due diligence.

What does this mean for UK firms?

Where UK businesses are exporting any of the products in scope, they will have to provide information to the EU importer relevant to the due diligence statements, including the country of production and the geolocation of all plots of land where the relevant commodities were produced. Failure to comply will result in a penalty.

Under Keir Starmer’s government, the UK proposed an intention to strengthen its approach to deforestation regulation. Since 2013, there has been a mandatory due diligence framework in place for timber. The new plans aim to expand on this, whilst mirroring the EUDR as far as possible to protect the UK Internal Market and supporting export led growth. The government had planned for this proposal to be in place for 2027. However, we await further details on this policy development.