EUDR Due Diligence: Compliance Requirements

Since 4 December 2024, the EU Information System has been live, enabling companies to submit their due diligence statement and register their compliance procedures. This article provides a comprehensive overview of the current EUDR due diligence requirements, focusing on practical implementation steps for economic operators across the supply chain.

Critical Timeline Updates: What Changed in November 2025

The revised implementation timeline for EUDR compliance now stands as follows:

Despite discussions in the European Parliament regarding a further postponement to December 2026, companies must treat 30 December 2025 as the legally binding deadline until any additional delay is formally published in the Official Journal. The trilog negotiations continue through Christmas 2025, making it critical that businesses maintain readiness for the confirmed compliance date.

Understanding EUDR Due Diligence Obligations

The EU Deforestation Regulation establishes comprehensive due diligence requirements for operators placing relevant commodities and products on the EU market. The regulation covers seven key commodities: timber, cocoa, coffee, soy, palm oil, beef, and rubber, along with their derived products listed in Annex II.

Every economic operator must implement a robust due diligence process consisting of three essential components:

Information Collection Requirements

Operators must gather comprehensive data for each due diligence statement, including:

• Product details with corresponding HS code classification
• Country of production with geolocation coordinates (six decimal places accuracy)
• Supplier data and relevant information from the supply chain
• Product quantity and commercial activity documentation
• Formal declaration confirming deforestation-free and legally produced status

The geolocation coordinates represent a cornerstone of the EUDR due diligence statement. For production areas exceeding four hectares, polygon mapping with at least four non-linear coordinates is mandatory. Smaller plots may use a single coordinate point, provided it meets the six decimal place precision standard.

Risk Assessment Procedures

The due diligence risk assessment evaluates the probability that relevant products originate from deforested land or were produced in violation of relevant legislation. This assessment considers multiple factors, including the country of production's risk classification (low risk countries vs high risk countries), substantiated concerns raised by competent authorities, and the complexity of the supply chain.

For products originating from low risk countries, operators benefit from simplified due diligence obligations. However, the EU Commission's country risk benchmarking system has not yet published comprehensive classifications, meaning most operators must conduct full diligence risk assessments until further regulatory guidance becomes available.

Risk Mitigation Strategies

Where the due diligence process identifies non-negligible risk, operators must implement appropriate risk mitigation measures before placing products on the EU market. This may include requesting additional documentation from suppliers, conducting independent third-party verification, or implementing enhanced monitoring protocols within the supply chain.

Technical Implementation: The EU Information System

The launch of the IT system in December 2024 marked a critical milestone for EUDR compliance. Economic operators registration through this central platform is now mandatory, with the system providing several key functionalities:

Due Diligence Statement Submission

Each submitted due diligence statement receives a unique reference number upon approval by the information system. This reference number serves as proof of compliance for products entering the EU market and must be retained for five years following the transaction date.

Non-SME traders placing products on the EU market can now utilise an existing due diligence statement from their supplier, provided they collect and verify the reference number through the system. This represents a significant simplification compared to earlier interpretations requiring independent due diligence from every actor in the supply chain.

API Integration Capabilities

The EU Information System offers direct API connectivity, enabling seamless integration with existing ERP systems such as SAP or Microsoft Dynamics. This technical capability allows larger operators to automate much of their compliance procedures, reducing manual data entry and minimising the risk of human error in the diligence process.

Annual Consolidated Reporting

A major administrative simplification introduced in April 2025 permits companies to submit annual consolidated reports rather than individual statements for each transaction. This option particularly benefits SME operators managing high volumes of smaller shipments from consistent supply chains.

Differentiated Requirements for SME Operators

The regulation distinguishes between operators and traders, with further subdivisions based on company size. Medium-sized enterprises are defined according to EU criteria (balance sheet total below €43 million, net turnover below €50 million, fewer than 250 employees).

SME traders benefit from reduced obligations compared to non-SME traders and all operators. Specifically, SME traders need only collect and verify reference numbers from existing due diligence statements rather than conducting independent assessments. However, this exemption does not extend to SME operators, who must implement full due diligence systems regardless of company size.

Supply Chain Integration and Supplier Collaboration

Successful EUDR due diligence implementation requires close collaboration throughout the supply chain. The Team Europe Initiative, launched with €70 million funding (now exceeding €85 million), specifically addresses capacity building in producer countries to ensure smallholders and local suppliers can meet geolocation and documentation requirements.

The Zero Deforestation Hub established under this initiative provides technical assistance for geodata collection, helping to prevent supplier exclusion due to compliance barriers. For companies sourcing from developing markets, engaging with these support mechanisms can significantly improve supply chain resilience whilst advancing human rights and environmental protection objectives.

Enforcement and Penalties: What Non-Compliance Means

Competent authorities in EU member states possess extensive powers to verify compliance with the EU Deforestation Regulation. Where violations are identified, penalties can reach up to 4% of the operator's annual EU turnover—a threshold deliberately set to ensure meaningful deterrence even for large multinational corporations.

Beyond financial sanctions, non-compliance can result in customs holds, product seizures, and exclusion from public procurement processes. The reputational damage associated with EUDR violations also poses material risks, particularly for consumer-facing brands where sustainability credentials influence purchasing decisions.

Strategic Benefits Beyond Compliance

Whilst the due diligence requirements impose immediate costs, they simultaneously create strategic opportunities for forward-thinking operators. Enhanced supply chain transparency supports multiple ESG objectives beyond forest conservation, including:

• Improved climate change mitigation through verified deforestation-free sourcing
• Strengthened due diligence on human rights risks in raw materials production
• Enhanced credibility with investors requiring robust sustainability governance
• Competitive differentiation in markets where consumers prioritise ethical sourcing

For companies already implementing VSME sustainability reporting or preparing for CSRD obligations, the EUDR due diligence system generates valuable data that can be leveraged across multiple reporting frameworks.

Integration with Broader ESG Frameworks

The geolocation data and supply chain documentation required for EUDR compliance aligns closely with emerging expectations around biodiversity risk assessment and nature-related financial disclosure. Companies treating EUDR as an isolated regulatory exercise miss the opportunity to build integrated systems that address multiple compliance obligations simultaneously.

The regulation's focus on preventing forest degradation and protecting the world's forests connects directly to climate risk management strategies. Deforestation accounts for approximately 11% of global greenhouse gas emissions, making supply chain due diligence a material component of corporate climate action.

Practical Implementation Roadmap

With the December 2025 deadline approaching, operators should prioritise the following implementation steps:

1. System Registration: Complete economic operators registration in the EU Information System immediately to ensure technical access is established before peak demand periods.
2. API Testing: For companies planning automated integration, conduct thorough testing of the IT system connectivity with internal ERP platforms well in advance of go-live dates.
3. Supplier Engagement: Initiate formal communications with supply chain partners regarding reference number provision and geolocation data requirements. Early engagement prevents last-minute compliance failures.
4. Risk Assessment Framework: Develop documented procedures for conducting due diligence risk assessments, including clear criteria for determining when risk mitigation measures become necessary.
5. Data Management Protocols: Establish systems to ensure all relevant information and verification numbers are retained for the mandatory five-year period in accordance with regulatory requirements.

Looking Ahead: Regulatory Evolution

The November 2025 updates demonstrate the European Union's willingness to adjust implementation timelines in response to legitimate industry concerns. However, the fundamental obligations remain unchanged, and further delays should not be assumed. The regulation represents a permanent shift in how the EU market approaches forest risk commodities, requiring sustained investment in compliance infrastructure rather than temporary fixes.

Companies that view EUDR due diligence as an opportunity to build competitive advantage through enhanced transparency will be better positioned for long-term success than those treating it purely as a compliance burden. The regulation's emphasis on verified, traceable sourcing aligns with broader market trends towards ESG integration as a value driver.

Frequently Asked Questions

What information must be included in a due diligence statement?

A complete due diligence statement must contain product details (including HS code), country of production, geolocation coordinates with six decimal precision, supplier information, product quantity, and a formal declaration confirming legal production without causing deforestation or forest degradation. The statement must be submitted through the EU Information System and retained for five years.

Can SME traders use existing due diligence statements from suppliers?

Yes. The April 2025 simplification measures specifically permit SME traders to rely on existing due diligence statements from their suppliers rather than conducting independent assessments. However, they must collect and verify the reference number from the submitted due diligence statement and ensure it covers the specific products they are placing on the EU market.

How does the risk assessment differ for low risk countries?

Products originating from low risk countries qualify for simplified due diligence obligations, meaning operators can apply streamlined procedures when conducting their diligence risk assessment. However, as of November 2025, the EU Commission has not yet published comprehensive country risk classifications, so most operators must implement standard due diligence procedures until official guidance becomes available.

What happens if my supplier cannot provide geolocation coordinates?

If suppliers cannot provide the required geolocation data, operators face three options: work with the supplier to implement geodata collection systems (potentially leveraging Team Europe Initiative support programmes), source from alternative suppliers with established compliance procedures, or accept that the product cannot be placed on the EU market until proper due diligence can be completed. The regulation contains no exemptions for cases where data collection proves difficult.

How does EUDR compliance interact with CSRD reporting requirements?

Companies subject to both EUDR and CSRD reporting obligations can leverage their due diligence system data to address multiple disclosure requirements simultaneously. The supply chain transparency required for EUDR supports Scope 3 emissions accounting and biodiversity impact assessment disclosures under ESRS standards, reducing duplicative data collection efforts.

What should companies do if another delay is announced after December 2025?

Even if the European Parliament approves an additional postponement in late 2025, companies should maintain their implementation timelines. Any further delay would require formal adoption through the standard EU legislative process, which cannot be guaranteed. Organisations that defer preparation risk facing compressed timelines if the second postponement fails to materialise during trilog negotiations.