European Union Deforestation Regulation: What US companies should know

Due diligence requirements under the Regulation on Deforestation-Free Products (EUDR) will apply starting on December 30, 2024, setting in motion a landmark regulation to prevent products linked to deforestation and forest degradation from being placed on the EU market.

The EUDR effectively prohibits the import, sale, or export of certain commodities and derivatives within the EU unless they are deforestation-free, produced in accordance with relevant local laws in their country of production, and covered by a due diligence statement submitted electronically to an information system accessible to competent and customs authorities. As described in further detail below, the EUDR will impact US companies that export covered commodities to the EU – either directly or indirectly through an EU supplier.

The EUDR entered into force on June 29, 2023, repealing the EU Timber Regulation, which focused primarily on illegal logging. The EUDR’s regulatory ambition is broader, aiming to curb global forest degradation and deforestation, protect biodiversity, and reduce greenhouse gas emissions, by placing significant new obligations and restrictions on companies that import, export, or sell certain products in the EU.

The EUDR gives companies 18 months from the date of its adoption to prepare for and implement the new rules, with large businesses – those with more than 250 employees – expected to be in compliance as of December 30, 2024 (smaller and micro enterprises have additional time to comply). In the meantime, the EU Commission is developing guidelines to clarify the EUDR’s requirements and published a nonbinding FAQ document to assist the regulated community in preparing for compliance. The final guidelines are expected to be adopted before the December 30, 2024 compliance date.

Which companies are affected?

The EUDR applies to companies, whether located in the EU or abroad, that import to, export from, or place on the EU market any of seven relevant commodities: cattle, cocoa, coffee, palm oil, soya, rubber, and wood. The same obligations apply to specific relevant products listed in the regulation made from, containing, or fed with those commodities such as chocolate, furniture, leather, soybeans, beef, books, printed paper, and other derivative products.

The EUDR has significant implications for US companies that produce, trade, or use these commodities, as they will need to comply with the new rules or risk losing access to the EU market. US companies can be impacted directly, if they export covered commodities to the EU, or indirectly, through an EU customer, if they are within the value chain of covered commodities or derivative products.

What are businesses required to do?

In-scope companies will be banned from placing and making available on the EU market or exporting covered commodities and products unless they provide a reference number which proves that they submitted a due diligence statement demonstrating that the covered commodity or product is deforestation-free and legally produced.

• Deforestation-free: Products must be traceable to the plots of land in the US or abroad where the covered commodities were produced or harvested. Companies must supply conclusive, verifiable information proving that all such plots of land have not been subject to deforestation or forest degradation since December 31, 2020, including geolocation data, evidence of land ownership, and supplier information.


• Legally produced: Commodities must have been produced and harvested in compliance with relevant legislation in their jurisdiction of origin, including city, county, state, and federal US law. Companies must provide conclusive, verifiable information demonstrating that the covered commodity was produced in accordance with applicable local laws, including land use rights; environmental protections; forest-related regulations, including forest management and biodiversity conservation rules; third-party rights; labor rights; human rights protected under international law, including the principle of free, prior, and informed consent; and tax, anti-corruption, and customs regulations.


• Free of deforestation risk: Companies must conduct an annual risk assessment and declare that covered commodities or products present no or negligible risk related to deforestation and legal compliance. A company that discovers a non-negligible risk must install measures to mitigate this risk.

To this end, companies are required to set up and maintain a due diligence system consisting of three key steps:

• Collect extensive information, documents, and data which demonstrate that the relevant products comply with the EUDR. Such information should include a range of data points, from a description of the goods and suppliers to geolocation data of the plots of land on which the relevant commodity or product was produced, to ensure traceability of products.


• On the basis of the collected information, companies need to assess the level of deforestation risk associated with the product. The risk assessment will be informed by various factors, including the EU Commission’s global deforestation risk classification (which is expected to be published before 2025 but may be delayed). A company that sources commodities exclusively from low-risk areas may follow a simplified due diligence procedure and will be exempted from the EUDR’s risk assessment and mitigation exercises unless it discovers or is made aware of a potential deforestation or legal compliance risk.


• If non-negligible risks are identified, companies need to take adequate and proportionate mitigation measures, ranging from requesting additional information from actors along the supply chain to conducting audits and independent surveys.

For each batch of relevant commodities or products placed on the EU market or exported from the EU, companies must electronically submit a due diligence statement to the information system, accessible to national competent authorities and customs for oversight and enforcement.

Companies must also enact adequate policies, controls, and procedures to mitigate and manage deforestation and noncompliance risk and must report publicly on their EUDR due diligence systems. To avoid duplication of reporting obligations, companies can report their EUDR compliance in other reports (eg, the Corporate Sustainability Reporting Directive, or CSRD).

Enforcement: Significant penalties and the possibility of private litigation

The EU Commission has received several petitions to extend the December 30, 2024 compliance deadline, including from the US government, but has so far declined to delay enforcement.

EU member states must enact rules to create penalties for violating the provisions of the EUDR. Penalties shall include fines of at least 4-percent of EU turnover, confiscation of noncompliant products and associated revenues, temporary exclusion from public procurement and public funding, and, in the event of serious or repeated infringements, prohibition from placing or making available on the market or exporting relevant commodities and relevant products, and prohibition from exercising simplified due diligence, if applicable.

Member states’ customs agencies and other competent authorities will enforce the new rules.

Next steps: How can US companies prepare?

Ahead of implementation, companies in the US may consider the following steps:

• Assess covered products. Identify products that consist of, include, or are derived from cattle, cocoa, coffee, palm oil, soya, rubber, or wood. 

• Assess deforestation risks. Identify risks associated with these products and suppliers’ compliance with local law. 
  
  
• Map and trace supply chains. Conduct thorough supply chain mapping to determine the origins of regulated commodities. Ensure that suppliers provide evidence of land ownership and geolocation data for crop locations to confirm that their products are sourced from areas not linked to deforestation.
  
  
• Develop or enhance due diligence systems. Implement robust due diligence procedures that meet the EUDR’s standards, including regular risk assessments and mitigation plans. Create processes for verifying and documenting compliance with EUDR requirements throughout the supply chain.  
  
  
• Engage suppliers. Communicate EUDR requirements to relevant suppliers and establish compliance expectations. Update supplier contracts to include EUDR-related obligations, such as data sharing and audit rights.
  
  
• Monitor EUDR developments and other regulatory changes. Follow guidance issued by the EU Commission or member states’ customs authorities, and prepare for anticipated deforestation regulation in other jurisdictions. For example, several legislative proposals in the US in recent years – including in New York, Illinois, and at the federal level – indicate increased attention on, and an interest in regulating supply chains to combat, deforestation.

Learn more about the implications of the EUDR by contacting any of the authors or your DLA Piper relationship lawyer, and visit our ESG website for analysis of the latest developments in this space. You may also reference our prior alerts on EU regulatory developments, such as the Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive and their impacts on US companies.