Seeing the wood from the trees: simplifying compliance with the EU’s Deforestation Regulation

The countdown is on to the commencement of the European Union (EU)’s Regulation on Deforestation-free Products (EU) 2023/1115​ (the Regulation). The Regulation will apply to large and medium-sized undertakings across the EU from 30 December 2025, and to micro and small entities from 30 June 2026.

The purpose of the Regulation is to make EU supply chains deforestation-free, by removing “relevant products” from the market  that contain, have been fed with, or been made using “relevant commodities” associated with deforestation and forest degradation. The Regulation targets seven “relevant commodities”: cattle, cocoa, coffee, oil palm, rubber, soya and wood. Annex I to the Regulation contains a list of products designated as “relevant products”. Before these products may be placed on the EU market, or exported from the EU, businesses will be required to ensure they:

1. are deforestation-free
2. have been produced in accordance with national law (in the country of origin)
3. are covered by a due diligence statement (a DDS)

See our previous article for more detail on the Regulation.

Supports for stakeholders

Following stakeholder concerns, which reached their zenith last year, the European Commission (the Commission) first postponed the application of the Regulation by one year (from 2024 to 2025) and has been working since then to simplify the process and make the aims of the Regulation more achievable (and palatable to sceptical stakeholders).

The EU has made various support tools available to help stakeholders to prepare, including a frequently asked questions document (the FAQs), which was updated in April 2025 and will be maintained on a regular basis. A formal guidance document from the Commission, published in November 2024, was also updated in April 2025 (the updated guidance is awaiting formal publication in the Official Journal of the EU). These documents are available to download here. Among the simplification measures introduced in April, the following were particularly welcome:

• Large companies may reuse an existing DDS when goods, previously on the EU market, are re-imported.
• An authorised representative may submit a DDS on behalf of company groups.
• Companies will be permitted to submit a DDS annually instead of for every shipment or batch placed on the EU market.
• Businesses positioned downstream in the supply chain must submit a DDS, but they are not required to do the information gathering required of their upstream partners (required under article 9 of the Regulation). Instead, they may ‘ascertain’ that due diligence has been carried out upstream by collecting the reference number of any DDS submitted by their suppliers and using those references in their own submissions. (Note that there is no legal obligation for a small or medium-sized enterprise (SME) trader or an SME downstream operator to submit a DDS or to ascertain that due diligence was exercised upstream.)

The above supports will be complemented by a Delegated Regulation, which will amend the list of relevant products set out in Annex I to the Regulation following complaints of uncertainty. The public consultation on the Delegated Regulation closed on 13 May 2025 and it is expected to become law in the next three to five months.

The EU has also developed a Registry of Due Diligence Statements (called the Information System), which is a specialised online tool that allows operators, traders and their representatives to create and submit electronic DDSs to the relevant authorities.

Risk classification of countries

The Regulation requires the Commission to classify countries according to their risk of producing products that are not deforestation-free. On 23 May 2025, the Commission published an Implementing Regulation in the Official Journal of the EU which sets out the countries designated as low and high risk for the purposes of the Regulation. This list will be reviewed and updated as often as necessary to reflect best evidence. Countries not expressly listed as low or high risk are to be treated as standard risk. A useful online Country Classification List has also been created.

140 countries have been designated as low risk; this includes the 27 EU Member States, China, Canada, the US, Australia, New Zealand and Saudi Arabia. Just four countries have been designated as high risk: Belarus, the Democratic People’s Republic of Korea, Myanmar and the Russian Federation.

Those dealing with products from low risk countries will be able to avail of a simplified due diligence process, which exempts them from carrying out a risk assessment or implementing risk mitigation measures.

Operators sourcing from standard and high risk countries are subject to the same standard due diligence obligations, but shipments from high risk countries will be subject to enhanced scrutiny from competent authorities. The Commission notes in the FAQs that “drastic changes of supply chains are not warranted or expected” and high risk classification will entail “a specific dialogue with the Commission to address jointly the root causes of deforestation and forest degradation, and with the objective to reduce their level of risk”.

Next steps

The Regulation has so far escaped the reforming zeal being applied to other ESG measures (such as the Corporate Sustainability Reporting Directive), but it remains controversial. How it is received in the coming months, and how it affects the supply chains for some of the world’s most valuable commodities in particular, may determine its fate.

For further information on this topic, please contact Jill Shaw, Anne O’Neill or any member of ALG’s ESG & Sustainability group.

Date published: 2 July 2025