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Analysing Compliance Needs for Timber and Wood Under EUDR
A quick breakdown of how EUDR affects the various supply chain verticals in the timber industry
Published April 9, 2025
Asharita D'Silva
Bangalore, India
Asharita D'Silva
Expert@Era of We
The timber industry is a critical sector in Europe, both economically and environmentally. Encompassing everything from forest management to finished wood products, the industry supports millions of jobs and contributes significantly to the circular bioeconomy. However, new regulatory frameworks like the EU Deforestation Regulation (EUDR) are reshaping how the industry operates, particularly concerning environmental and legal compliance.
With growing demand for sustainable materials and rising regulations, it’s more important than ever for businesses in the timber sector to stay informed and adaptable. In this post, we’ll explore the main sectors within the European timber industry and take a closer look at the EU Deforestation Regulation (EUDR) that’s shaping its future.
Different Sectors Within Timber and Wood
1. Logging and Forestry
Logging and forestry form the foundation of the timber industry. Sustainable forest management practices are central to this sector, balancing the need for wood resources with biodiversity conservation, soil and water protection, and carbon sequestration. Europe is known for its relatively sustainable forestry practices, particularly in countries like Sweden, Finland, and Germany, where forests are expanding due to careful replanting and stewardship.
Within the EEA, Norway has one of the world’s most advanced forest monitoring systems and places strong emphasis on biodiversity, reforestation, and sustainability. This positions Norwegian timber products favourably under the EUDR, as traceability and compliance are often already built into national forest policies.
In North America, both Canada and the United States are key players in the global timber trade. These countries benefit from vast, managed forest areas. Canada, for instance, has rigorous legal frameworks and third-party certification systems like FSC and PEFC that enhance transparency. However, under the EUDR, exporters must still provide plot-level geolocation data and prove compliance with local laws and environmental protections—regardless of existing certifications.
2. Wood Processing
Once harvested, raw timber undergoes primary processing, including sawing, chipping, and drying. Sawmills convert logs into lumber, boards, and other forms of dimensional wood. This processed wood becomes the raw material for further manufacturing or construction. Technological advancements have improved efficiency and waste reduction in this sector, allowing for better yield from each log.
3. Pulp and Paper
The pulp and paper industry is a major branch of timber utilization in Europe. It transforms wood chips and fibres into paper, cardboard, and packaging materials. Countries such as Sweden and Finland are global leaders in this domain, emphasizing sustainable sourcing and energy-efficient production processes. The rise in demand for recyclable packaging and eco-friendly paper alternatives has also driven innovation in this sector.
4. Wood Fuel
Wood fuel, including firewood, wood pellets, and wood chips, plays a significant role in Europe's renewable energy mix. Biomass energy from wood is considered a carbon-neutral alternative to fossil fuels, especially in regions aiming to reduce their carbon footprints. The demand for wood fuel has grown, particularly in response to energy crises and climate targets, but it must be carefully managed to avoid overharvesting.
5. Wood Product Manufacturing
This sector involves the transformation of processed wood into final products such as furniture, flooring, construction materials, and engineered wood like cross-laminated timber (CLT). The European wood manufacturing industry is diverse and innovation-driven, with a growing emphasis on sustainable design, circularity, and eco-labelling. The integration of digital tools like CAD and CNC machining has revolutionized production precision and efficiency.
How Does EUDR Affect the Timber Industry?
The EU Deforestation Regulation (EUDR) will significantly reshape how timber-related supply chains operate within and outside the EU. While the regulation targets a wide range of commodities, the timber industry is particularly complex due to the diversity of its supply chains—from primary forest harvesters to manufacturers and retailers of processed wood products.
Between the range of actors and the number of steps in the value chain, ensuring compliance will require deep supply chain transparency, enhanced collaboration, and robust traceability tools.
Industrial Roundwood Supply Chains
These are relatively short and direct. The chain typically looks like this:
Forestry Operator ➜ Log Buyer/Harvester ➜ Sawmill ➜ Distributor ➜ EU Importer
Compliance Impact: Due diligence is most straightforward here because the supply chain is traceable to a small number of actors. Still, geolocation data and legal harvest documentation must be collected at the forest level. Digital traceability tools can be easily integrated due to centralized operations.
Smallholder Timber Supply Chains
These involve many small forest landowners, particularly in tropical regions, selling through intermediaries.
Smallholder ➜ Aggregator ➜ Trader ➜ Processor ➜ Exporter ➜ EU Importer
- Compliance Impact: These are high-risk chains due to fragmentation, informal operations, and often limited documentation.
Collecting accurate geolocation data and legal documents from multiple small sources can be difficult. EU importers must work with local aggregators or NGOs to improve record-keeping and legality assurance at the source.
Processed and Composite Wood Product Chains
This includes products like plywood, fibreboard, furniture, or paper, which can contain timber from multiple origins or species.
Multiple Forest Sources ➜ Primary Processors ➜ Manufacturers ➜ Exporters ➜ EU Importers
- Compliance Impact: Traceability is complex due to the blending of different species and origins.
- Geolocation Rule: EUDR still requires the exact origin of all wood content, meaning companies must disaggregate the supply chain even for blended products.
Manufacturers and traders in countries with low enforcement of forest laws or mixed sourcing are particularly vulnerable to non-compliance.
Secondary Processing Chains
In some regions (especially Asia), timber is imported, processed into furniture or flooring, and then exported again.
Imported Timber ➜ Processing (non-EU country) ➜ Export to EU
- Compliance Impact: Even if the timber was imported legally into a non-EU country, the original harvest location must still be proven deforestation-free. Simply being processed in a third country does not remove the obligation to trace origin.
EU operators must gather origin data from before the wood entered the processing country.
How Can Timber Businesses Prepare for EUDR?
Gathering the necessary documentation to comply with the EUDR’s due diligence requirements is the key first step toward compliance. Both operators (those placing products on the EU market) and traders (those selling or distributing) must maintain detailed records demonstrating the deforestation-free status and legal compliance of their commodities. The documentation process involves:
1. Information Collection
Operators must gather comprehensive data, including:
- Product details: trade name, weight in kilograms, quantity, and country of origin.
- Supplier and buyer contact details.
- The common and scientific names of wood species used.
- Geolocation coordinates of all production plots or areas where timber was harvested.
- All information must be retained for at least five years.
2. Due Diligence Statement
Before a product is marketed or exported, a due diligence statement must be submitted through the EU's Information System. This declaration affirms that the product complies with EUDR requirements and is ready for market access.
3. Risk Assessment
Businesses must evaluate the likelihood of non-compliance, taking into account:
- The risk category of the country of production (classified by the EU as high, standard, or low risk).
- Complexity and transparency of the supply chain.
- History of illegal deforestation or land tenure conflicts in the area.
- Credibility and consistency of documentation.
4. Risk Mitigation
If risks are identified, companies must adopt proactive mitigation strategies, which may include:
- Commissioning third-party audits or independent inspections.
- Requesting additional proof of legality from suppliers.
- Establishing longer-term partnerships with verified low-risk suppliers.
- Strengthening internal compliance systems and training staff.
Long-Term Strategic Steps
- Digital Traceability Tools: Invest in blockchain-based or digital tracking solutions that automate compliance checks and create tamper-proof records.
- Supplier Engagement: Build close relationships with upstream suppliers to ensure full cooperation on documentation and audits.
- Staff Training: Ensure all team members involved in sourcing, procurement, and compliance understand the requirements of the EUDR.
- Adapt Business Models: Prepare for potential shifts in supply chain dynamics, including sourcing from certified low-risk areas or pivoting to alternative materials when necessary.
The Future of Timber Starts Now
The EUDR is set to impact every facet of the timber supply chain, necessitating proactive measures from industry stakeholders to adapt to the evolving regulatory landscape. While the EUDR presents challenges, it also pushes the industry toward more sustainable and transparent practices.
At Era of We, we're committed to helping our partners and clients navigate these changes smoothly. Whether you’re a supplier, manufacturer, or retailer, staying informed and proactive is the best way to stay ahead.
Do you want to learn more about how we’re supporting compliance and sustainable timber sourcing? Contact us here: https://www.eraofwe.com/contact/
About the author
Asharita D'Silva
Join me in discovering the wonderful world of coffee! As a writer, coffee is my fuel and newfound passion. I love writing about new coffees, sustainability, and coffee culture around the world. I'm always discovering new things about coffee and the industry, which I share with the great community here at Era Of We.
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