📌This article, written by ESG researcher Rosaida Brahim, provides insight on the possible penalties organizations risk when they aren't on track for EUDR compliance by 30 December 2026.
From December 30, 2026 onwards organizations will need to prove their compliance with the EU Deforestation Regulation. This is a hard deadline, meaning that if organizations cannot provide evidence for their compliance in the form of a due diligence statement they risk a series of possible penalties.
This article aims to give organizations a better understanding of what repercussions they risk by:
1. A brief overview of the EUDR
2. How compliance is monitored
3: What penalties have been outlined in the EUDR
4: Examples of how the EU has enforced existing penalties
5: How MasterStustainability.today can help organizations mitigate these risks
The EU Deforestation Regulation (EUDR) is aimed at reducing the EU's contribution to global deforestation by monitoring trade in cattle, cocoa, coffee, palm oil, rubber, soya, and wood, plus a whole host of products derived from these commodities.
A comprehensive list of impacted products and their HS codes can be found in Annex A of the regulation. It also includes clarification on which products have been excluded from the regulation. It is highly advisable for organizations to compare their products to the annex in order to be sure if and how their products fall under the scope of the EUDR.
If a product does fall under the scope of the regulation, then organizations must go through a thorough due diligence process to prove that no deforestation or forest degradation has occurred in getting it to market. This includes the collection of documentation such as: product details, supply chain contacts, precise geolocation data, and evidence of legality.
These requirements are intense for even the most straightforward products, but if a product is a composite of multiple in-scope products or commodities, then the paperwork really starts adding up.
For a product relevant to the EU Deforestation Regulation to enter the European market it needs to be accompanied by a Due Diligence Statement (DDS). This document shows that all the required steps have been taken to make sure that the product is deforestation-free.
The DDS is a summary of all the data that is collected; the data itself must be kept by organizations and easily accessible for auditors to check at a moment's notice. For the DDS to be valid it needs to be entered to and accepted in TRACES, the EU's certification platform, using the EUDR Information System. This will generate a unique DDS reference number that follows the product throughout its journey throughout the supply chain.
Once entered into TRACES, the DDS becomes legally binding. If the DDS is incomplete or misleading, then the organization responsible for producing it risks serious penalties.
Simply put, in-scope products without a Due Diligence Statement are not allowed on the EU market. If compliance is in question, then products already on the market will be recalled.
The cost of this alone is already devastating for many organizations, who would also be facing a number of possible penalties. These penalties are outlined in Article 25 of the EU Deforestation Regulation;
Fines
In terms of fines, the EUDR calls for the costs to reflect the severity of the violation. We can assume that "small" offence get lesser fines, and "big" offences get greater fines. What separates a "small" offence from a "big" offence is unclear.
For repeat offenders, the regulation calls for a fine that is at least 4% of the operator's total annual Union-wide turnover in the financial year preceding the fining decision. It is encouraged to raise the fine so that it exceeds the potential economic benefit that could be gained from taking the risk of non-compliance.
Confiscations
Non-compliant products in the scope of the EUDR will be confiscated. If any revenue was gained from the products prior to this confiscation, that revenue will also be confiscated.
Reputation
Organizations who have been judged to have been non compliant will have their information published on a list on The European Commission's website. This can be a major blow to the reputation of the organization; on top of this, organizations will not be allowed to have access to public funding such as grants for up to a year after having been judged in violation of compliance.
EU Timber Regulation (EUTR)
The EU Timber Regulation (EUTR) provides good insight into how EUDR penalties might be enforced. Though the EUTR focuses on the illegal timber trade it cannot be considered a true predecessor of the EUDR, where the same issue forms only a small part of a much wider regulation. Still, when the EUDR is implemented in December, the EUTR will be repealed and its products
Like under the EUDR, under the EUTR Member States are allowed to fine organizations proportional to the severity of their misconduct. Unlike the EUDR, there aren't any specific metric guidelines to define the severity of those fines. In fact, one of the common criticisms of the regulation is that the penalties are not severe enough.
Here are a few examples of fines levied against organizations in different EU countries:
Sweden: A fine of €79,500 against an Operator who did not improve practices after a previous injunction.
Netherlands: A fine of €20,000 against an Importer per cubic meter of Burmese teak.
Germany: The confiscation of timber from DR Congo imported via falsified documentation.
But it's difficult to find an overview of which organizations have been penalized under the EUTR and for how exactly how much. This won't be the case for the EUDR, where a list of violators will be published to The European Commission's website.
General Data Protection Regulation (GDPR)
The General Data Protection Regulation (GDPR) is a good example of a regulation where those in violation of compliance were dealt out some serious financial penalties. It's also much easier to find out which companies have been penalized in relation to non-compliance, even though there is no single official EU tracker.
Poland: €1,393,300 fine against a food delivery platform for requesting personal documentation scans without sufficient legal basis.
Romania: €5,000 fine against the National Postal Service of Romania for a data breach which resulted in packaging being destroyed.
Though we see a range of fine amounts just as in the EUTR, the fines for the GDPR are a lot higher in comparison. It is also a regulation where the penalties are much more clearly defined, and much more harshly enforced.
Like the GDPR, the penalties for non-compliance are much more clearly defined in the EU Deforestation Regulation than they were in the EUTR. Here is the major difference: in the GDPR fines hit a ceiling at 4% of the annual global turnover, whereas in the EUDR the fines have a minimum of 4% of the annual global turnover.
The clear take away from this is that the Commission takes EUDR compliance very seriously, and is willing to enforce serious consequences on non-compliance.
For many organizations it is becoming clear that traditional data management methods are not equipped to deal with the sheer amount of data that needs to be processed, stored, and communicated for a regulation like the EU Deforestation Regulation.
Luckily, there are plenty of consultancy platforms and data management tools for organizations to make compliance manageable.
Looking for a solution that offers insight, efficiency and impact?
MasterSustainability.today supports organizations in the digitization of their EUDR process, from data collection and supply-chain collaboration to audit preparation and TRACES-registration.
Download our EUDR Brochure to see if our solution is the right fit for your compliance journey.
Sources:
EU Deforestation Regulation (Regulation - 2023/1115)
EUDR May 4 Simplification Review
Basic EUTR: How to get started | Preferred by Nature