The European Union’s Deforestation Regulation (EUDR) takes effect at the end of 2025, reshaping how companies across the supply chain handle key commodities. Understanding your obligations is now essential for both market access and brand reputation whether you’re in packaging, manufacturing, or distribution.
What Is the EUDR?
The EUDR aims to prevent deforestation and forest degradation linked to globally traded commodities. From 30 December 2025, companies will only be able to place, make available, or export certain products in the EU if they can prove those products are:
- Deforestation-free (no forest clearance or degradation after 31 December 2020)
- Legally produced (compliant with local laws in the country of harvest)
- Covered by a Due Diligence Statement submitted via the EU’s TRACES NT system
This regulation is not small in scope. It is estimated to impact $401 billion of EU trade annually –about 5.5% of all EU imports
Who Does It Apply To?
The regulation covers seven major commodities: wood, cattle, cocoa, coffee, palm oil, rubber, and soya, along with many derived products, including pulp, paper, packaging, furniture, and leather.
Obligations differ depending on company size and role in the supply chain:
- Upstream Operators (importers/harvesters): Conduct full due diligence, including geolocation data.
- Downstream Operators (processors, converters): Confirm and record supplier due diligence.
- SME Traders: Keep records of supplier due diligence statements.
- Large Companies: Must also appoint a compliance officer, carry out annual audits, and publish reports.
Company Size Thresholds at a Glance
Despite looming deadlines, readiness remains low. According to a 2024 assessment of the Forest 500 (the companies most exposed to deforestation risk), only 16 have taken credible action to eliminate deforestation from their supply chains. 316 have weak or partial commitments, and 168 have none at all.
Key Compliance Dates
- 29 June 2023: Timber harvested on or after this date fall under EUDR rules.
- 30 December 2025: EUDR applies to medium and large companies.
- Large companies are those exceeding two of the following: balance sheet ≥ €25 million, net turnover ≥ €50 million, and ≥ 250 employees.
- Medium companies are below those thresholds but larger than small-company status (generally turnover €10–50 million and 50–249 employees).
- 30 June 2026: Small and medium-sized enterprises (SMEs) must comply.
- SMEs fall below the “large” thresholds, with small companies generally defined as balance sheet €5–7.5 million, turnover €10–15 million, and fewer than 50 employees.
- 30 December 2028: Full transition from the previous EU Timber Regulation (EUTR).
What Does Compliance Involve?
At the core of EUDR compliance is due diligence, which requires:
- Information Gathering: Collect product details, HS codes, species, supplier/customer information, and geolocation of land where commodities were harvested.
- Risk Assessment: Evaluate risks of deforestation, illegality, or supply chain complexity.
- Risk Mitigation: If risks are more than negligible, take corrective measures before placing products on the market (for example, supplier audits or changing sources).
- Due Diligence Statement: Register compliance in the TRACES NT system.
- Record Keeping: Maintain documentation for at least 5 years.
The EU expects the regulation to cut 32 million tonnes of CO₂ each year, roughly equal to the annual emissions of an entire mid-sized country.
What Happens If You Don’t Comply?
Non-compliance carries significant consequences, including:
- Fines of up to 4% of annual EU turnover
- Confiscation of products or revenues
- Temporary bans on trading relevant products
- Exclusion from public procurement and funding
Compliance costs are projected at $170 million to $2.5 billion USD per year, but these costs are minor compared with the financial and reputational damage of falling short.
Turn Compliance into an Opportunity
EUDR compliance provides companies with a way to demonstrate responsible sourcing, strengthen supply chains, and build trust with customers. Not sure what steps you need to take? Take a look at this EUDR compliance checklist to find out.
For packaging manufacturers, solutions like Abaca can help by streamlining production processes, centralising reporting, and reducing administrative burden that comes with regulatory requirements. Those that prepare early will not only be ready for enforcement but will also turn compliance into a competitive advantage.