Know the Chain, Keep the Market: Case EUDR

The road to the applicable EU Deforestation Regulation (2023/1115, the "EUDR") has been a long one. Since its adoption in 2023, the regulation has faced widespread concern over its compliance burden, leading to considerable amendments in 2025 and two successive extensions to its application timeline.

Finally, in May 2026, a key milestone was reached when the European Commission published its simplification review and presented updated guidance, FAQs, product scope refinements and further measures to support effective implementation. Most significantly, the Commission confirmed that it does not propose further amendments to the basic legal text of the regulation.

This means that companies should be ready to comply with the EUDR when it becomes applicable on 30 December 2026.

When preparing for this new regulatory framework, the following questions are worth considering:

According to the EUDR, only entities who, in the course of a commercial activity, place on the EU market, or export therefrom, relevant products listed in Annex I of the EUDR for the first time, are responsible for exercising due diligence and submitting corresponding due diligence statements to the EU information system prior to placing those products on the EU market. For these entities, also known as the “operators”, securing supply chain information and maintaining adequate due diligence systems is critical: Without these, market access will be denied under the EUDR.

The need to assess processes may, however, extend further. Given the supply chain information obligations embedded in the EUDR framework, also entities operating further upstream in the supply chain – that may not immediately recognise themselves as affected by the regulation – should carefully consider whether the extraterritorial effects of the EUDR extend to their operations. In particular, they should assess whether they are in a position in the supply chain where the ability to collect and transmit the information required under the EUDR is in practice essential for maintaining commercial relationships.

At its core, the EUDR is built on a simple-looking yet demanding premise under which the information regarding the origin of raw materials must travel with the relevant products throughout the entire supply chain, from the production sites to the first placing on the EU market. The relevant information in this regard centres on two key elements: First, demonstrating that the relevant products have been produced in accordance with the relevant legislation of the country of production (legality), and second, demonstrating that the products are deforestation-free.

In retrospect, these obligations are not entirely new for timber products as the predecessor of the EUDR, the EU Timber Regulation (995/2010, the "EUTR") already required that only legally harvested timber could enter the EU market. However, the EUDR goes a step further by also requiring deforestation-free production – a standard set by the EU itself, not by the country of production.

This addition makes the EUDR potentially far-reaching in practice. It means that operators placing relevant products on the EU market must ensure compliance with both standards even where the product originates from a non-EU country. Moreover, even entities that do not themselves place products on the EU market, but seek to serve customers that do, may find themselves in a position where ensuring compliance with both the legality and the deforestation-free standards becomes essential for maintaining commercial relationships. In this way, the EUDR effectively has an extraterritorial reach on entities located outside the EU and not directly subject to the EUDR.

Not all non-EU countries necessarily welcome this “Brussels Effect” through which the EU effectively extends the reach of its regulatory standards beyond its borders.

It should be noted that at least the People's Republic of China has recently introduced new national security, cybersecurity and personal data laws countering improper intervention by foreign states in supply chains in the People's Republic of China through legislation with extraterritorial application.

Non-EU entities would therefore be well advised to monitor any countermeasures that their home jurisdictions have adopted or may adopt in response. In the extreme, such countermeasures carry the potential of creating a compliance trap, for instance where the country of production prohibits the collection or transmission of information that must accompany the product under the EUDR, making it impossible to comply with both sets of requirements simultaneously.

In practice, knowing the chain means securing the flow of supply chain information. Essentially, this requires companies to determine what information needs to be collected and how it can be obtained from the relevant parties.

The EUDR sets out a baseline for information that must be collected and kept on record (Article 9). This includes product descriptions and quantities, countries of production, the geolocation of production plots, production dates or periods as well as supplier and customer details. It also requires adequately conclusive and verifiable information demonstrating that products are deforestation-free and have been produced in accordance with the relevant legislation of the country of production. This last requirement is deliberately open-ended: What counts as sufficiently conclusive evidence will depend on the specific product, supply chain, production area and country of production.

Accordingly, identifying the necessary information is not simply a matter of following a standardised checklist. While the regulation establishes a mandatory baseline, the nature and extent of the required supporting evidence also depends on the risks associated with the supply chains, which different companies may assess differently. This may create practical challenges: Where different companies apply the risk-based framework in different ways, expectations across the supply chain may not align, leading to gaps or disputes over what information is sufficient. This makes early dialogue all the more important. Companies that engage proactively with their suppliers and customers to align on information requirements before compliance gaps materialise will be better positioned than those left to resolve disagreements after the fact.

An equally important question is how that information is actually collected and secured across the supply chain. Depending on the length of the supply chain, this may involve input from several parties, not just direct contractual partners.

When organising the collection of EUDR-related information across the supply chain, at least the following considerations should be addressed:

In practice, agreeing on these matters may require contractual agreements and the incorporation of flow-down provisions into them.

With the EUDR becoming applicable on 30 December 2026, the time to assess supply chain readiness is now at the latest. Should you need assistance with contractual arrangements, or with the application of the EUDR more broadly, our experts are happy to discuss these matters in greater detail.