The “Deforestation-Free” Regulation is postponed again… Are we truly ready?

The principle of compliance: three requirements for market access

In order to be placed on the EU market, commodities and products must comply with three cumulative requirements:

• They must be “deforestation-free”;
• They must have been produced in accordance with the legislation of the country of origin;
• They must be covered by a due diligence statement demonstrating the absence of deforestation and forest degradation throughout the entire supply chain.

This compliance principle necessitates comprehensive oversight of supply chains.

Due Diligence: the most demanding (and risk-prone) obligation for companies

Due diligence constitutes one of the Regulation’s most stringent requirements. It entails a structured control system requiring companies to:

• Collect detailed information, including geolocation data, concerning their supply chains;
• Assess the risk of deforestation, forest degradation, and illegality;
• Identify and implement mitigation measures where the risk is not negligible;
• Prepare and retain (for at least five years) a complete due diligence statement.

While the environmental rationale is commendable, the organizational burden on companies is substantial. Operators must be capable of demonstrating compliance throughout the entire supply chain, often requiring significant investment in data collection systems, traceability technologies, verification mechanisms, and audits — all to be implemented well in advance of the Regulation’s effective date.

Failure to comply – or inadequate compliance – may result in severe consequences.

The sanctioning system: critical issues

Regulation (EU) 2023/1115 entrusts Member States with defining the specific penalties, while mandating that they be effective, proportionate, and dissuasive.

The Regulation primarily provides for pecuniary sanctions and explicitly excludes custodial criminal penalties.

Article 25 establishes that financial penalties must amount to at least 4% of the operator’s total annual EU turnover in the preceding financial year.

Such a provision is capable of significantly affecting corporate financial stability. Even an isolated violation – such as the placement on the market of a single non-compliant product accompanied by an inaccurate due diligence statement – may have substantial economic repercussions. Operators are therefore required to adopt an exceptionally cautious and rigorous approach.

In addition to financial penalties, Article 25 also provides for supplementary or alternative measures, including:

• confiscation of the relevant products or proceeds,
• temporary exclusion from access to public funding, procurement procedures, grants, or concessions,
• temporary prohibitions on placing or making products available on the market.

The rigid application of this sanctioning regime, in extreme cases, may threaten business continuity.

For this reason, when addressing regulatory frameworks of such magnitude, a balance must be struck between environmental protection – undoubtedly a primary objective – and the tangible economic impact on businesses.

It is precisely here that the system appears to enter a form of “short circuit”: environmental protection is indispensable, but at what operational cost?

The latest postponement and operational simplifications: an attempt to make the Regulation workable

In December 2025, EU institutions adopted a further intervention concerning the EUDR, confirming a now evident trajectory: while the objective of zero deforestation remains unchanged, its implementation has once again been postponed, acknowledging that the operational framework is not yet fully prepared.

Originally scheduled for 31 December 2024 and subsequently postponed to 31 December 2025, the application of obligations has now been further deferred:

• Large operators must comply fully from 30 December 2026;
• Micro and small operators will have until 30 June 2027 to comply.

This postponement is largely attributable to the difficulties – reported by Member States and operators – in meeting traceability requirements and to the need to improve the digital system through which due diligence statements are submitted.

Alongside the postponement, targeted simplifications have been introduced to reduce administrative burdens and avoid duplication of compliance efforts along the supply chain. These include:

• The exclusion of certain printed products, such as books and newspapers, from the scope of the Regulation;
• Limiting the obligation to submit a due diligence statement to the first entity placing the product on the EU market, thereby preventing repeated filings along the commercial chain;
• Simplified declaration procedures for micro and small “primary” operators;
• Lighter intra-EU traceability requirements for subsequent transactions;
• An obligation for the Commission to present, by April 2026, an assessment of the administrative burden and practical applicability of the Regulation, potentially paving the way for further adjustments.

The revision – both a cause and a consequence of the latest postponement – reflects the need to prevent the absence of adequate IT systems and the complexity of the EU’s digital ecosystem from turning a commendable environmental objective into administrative chaos.

The impact of the EUDR: opportunities and risks

Regulation (EU) 2023/1115 is poised to generate significant effects, both positive and negative, not only within the EU but globally, reshaping supply chains and international trade relations.

Among the potential positive impacts are:

• A reduction in the EU’s contribution to global deforestation and forest degradation, with corresponding reductions in greenhouse gas emissions and positive effects on climate change mitigation and biodiversity protection;
• The development of advanced traceability systems, including satellite monitoring, as well as the promotion of more sustainable production practices and innovative solutions.

However, significant economic concerns remain:

• The rigidity and costliness of due diligence obligations may require substantial financial and organizational resources from operators, who must gather complex and often fragmented information across entire supply chains;
• Inevitably, such costs may ultimately be reflected in higher consumer prices for “green” products.

A necessary Regulation, yet still “ahead of its time”

The EUDR unquestionably represents one of the most far-reaching EU interventions ever adopted to combat deforestation. Its objective – to address climate change and biodiversity loss by preventing deforestation linked to European consumption – is undeniably commendable.

Nevertheless, the repeated postponements and successive simplifications reveal a clear reality: we are not yet fully prepared – not because environmental protection is unrealistic, but because the technical timelines for compliance were not aligned with the operational and economic realities faced by businesses.

The challenge for EU institutions is therefore to ensure that the Regulation is genuinely workable, without allowing its rigidity to generate economic disruption and competitive imbalances that outweigh its intended environmental benefits.

Sustainability must not become an obstacle course that businesses are structurally unable to complete.