The EU Deforestation Regulation (EUDR): What businesses need to know and do

Why the EUDR matters

Deforestation remains a critical global issue, fueling climate change and biodiversity loss. In 2022, the world lost primary tropical forest at a rate of about 11 football fields every minute. This rampant forest clearance is largely driven by agricultural expansion – for example, cattle ranching, soy farming, palm oil plantations and other commercial agriculture caused roughly 40% of tropical deforestation from 2000 to 2010. The environmental consequences are severe: deforestation contributes around 12% of annual global greenhouse gas emissions and destroys habitats that sustain 80% of the planet’s land-based wildlife.

The European Union plays a significant role in this problem as a major consumer market. The EU has been the world’s second-largest driver of tropical deforestation after China due to its imports of commodities like beef, soy, palm oil, coffee, cocoa, rubber, and timber. A WWF report found that 16% of tropical deforestation linked to international trade in 2017 was attributable to EU imports – representing about 203,000 hectares of forest loss and 116 million tonnes of CO₂ emissions in that year alone. 

In other words, European demand for everyday products has unwittingly fueled forest destruction abroad on a massive scale. This alarming impact has driven EU policymakers to take action so that consumption in Europe no longer comes at the expense of vanishing forests.

Enter the EU Deforestation Regulation (EUDR) – a new law designed to halt the EU’s contribution to global deforestation. Adopted as part of the European Green Deal and the EU’s broader sustainability agenda, the EUDR establishes new rules to ensure that products sold in the EU are “deforestation-free.” In practical terms, it will ban companies from placing certain commodities on the EU market (or exporting them from the EU) if those goods are linked to recent deforestation or forest degradation. 

To comply, businesses must trace their supply chains and prove their goods were produced in an environmentally responsible way. For sustainability professionals, compliance teams, and especially small-to-medium enterprises (SMEs) in relevant sectors, the EUDR represents a major shift in how supply chains are managed. 

This article provides a comprehensive introduction to the regulation – explaining what the EUDR is, its objectives and timeline, which commodities and companies are covered, the due diligence requirements, the role of country risk ratings, enforcement mechanisms, challenges (particularly for SMEs), how it fits with other EU sustainability policies, and a checklist for preparing. By understanding these facets, companies can navigate the EUDR’s requirements and turn compliance into an opportunity to lead on sustainable sourcing.

What is the EU Deforestation Regulation?

The EUDR is a new European Union law (Regulation (EU) 2023/1115) aimed at curbing deforestation and forest degradation caused by global supply chains. It was formally adopted in 2022 and entered into force on June 29, 2023. 

The EUDR builds on the EU’s prior efforts to fight deforestation – it actually repeals and replaces the older EU Timber Regulation (EUTR), which since 2013 had prohibited illegal timber imports. The new regulation significantly expands the scope beyond timber, covering a broader set of commodities responsible for forest loss. It is also more stringent: rather than targeting only illegal deforestation (as the EUTR did for illegal logging), the EUDR targets all deforestation regardless of legality, after a certain cutoff date.

At its core, the EUDR prohibits the placing of specific high-risk commodities on the EU market (or exporting them from the EU) unless the products are verified to be: 

(a) “deforestation-free,” and;

(b) produced in accordance with the laws of the country of origin. 

In addition, each in-scope product must be covered by a due diligence statement attesting to compliance. These requirements apply to any company (whether EU-based or not) that sells the regulated commodities in the EU or ships them out of the EU. 

In effect, the law leverages the EU’s market power to clean up supply chains: if you want access to the EU market, you must ensure your goods haven’t come from recently cleared forests or illegally exploited land.

What does “deforestation-free” mean? 

The regulation defines it very specifically. A product is deforestation-free only if the commodity was produced on land NOT subject to deforestation after December 31, 2020. This cutoff date means any forest-to-farmland conversion that occurred from 2021 onward disqualifies the product. 

For wood products, the rule is stricter: wood must also not be from forests that were degraded (not just fully deforested) after the 2020 cutoff. “Forest degradation” refers to detrimental changes like converting a primary or regenerating forest into a plantation or other land use. In simpler terms, if a piece of land was forest as of end-2020, it cannot have been cleared or heavily damaged thereafter to grow or raise the commodity. 

The EUDR aims to decouple EU supply chains from recent deforestation. It also requires that the commodity’s production complied with all relevant local laws (for example, land use rights, harvest permits, and environmental regulations in the source country) – ensuring products are both deforestation-free and legal.

Objectives of the EUDR

The regulation’s goals align with the EU’s climate and biodiversity commitments. According to the European Commission, the EUDR’s new rules aim to ensure EU consumption of certain products no longer drives deforestation and forest degradation, thereby lowering global greenhouse gas emissions and biodiversity loss. 

An official objective is to cut carbon emissions by at least 32 million metric tonnes per year that would otherwise result from EU-driven deforestation. For context, that is roughly equivalent to the annual emissions of a country like Denmark or about 7 million cars off the road each year.

By eliminating deforestation from supply chains, the law also seeks to protect forest ecosystems that are habitats for thousands of species and lifelines for 1.6 billion people worldwide. In short, the EUDR is a key instrument for the EU to “lead the way” on global forest protection, complementing its climate action (reducing CO₂) and its biodiversity strategy.

Timeline: When does the EUDR take effect?

Although the EUDR entered into force in mid-2023, it does not start applying overnight. There is a phased implementation to give businesses time to adapt. Initially, the law was slated to apply 18 months after entry into force – meaning end of December 2024 for large operators, and an extra 6 months (June 2025) for smaller firms. However, in response to industry and global partner concerns about readiness, the EU granted an additional 12-month phase-in delay in late 2024.

Key dates to know:

June 29, 2023: The EUDR entered into force. From this point, it became official EU law, although compliance obligations were not yet active. Companies were expected to begin preparations early.

December 30, 2025: Compliance becomes mandatory for large and medium-sized companies (i.e. operators and traders above the SME threshold). This is the deadline for these companies to have their due diligence systems fully operational.

June 30, 2026: Obligations apply to micro and small enterprises. SMEs were granted an additional six-month grace period to prepare for compliance.

By June 30, 2025: The European Commission will publish the country risk benchmarking classifications (low, standard, high risk) and assess whether to expand the list of regulated commodities (e.g. maize or biofuels).

2025 and beyond: Member States will begin scaling up inspections and enforcement. The legacy EU Timber Regulation (EUTR) will remain applicable only for timber harvested before June 2023 and will be fully phased out by the end of 2027.

What commodities and actors are covered?

The EUDR targets specific forest-risk commodities – in other words, products whose production is commonly associated with deforestation. There are seven main commodities named in the regulation, along with certain derived products made from or containing them. These are often referred to as the “relevant commodities”:

• Cattle (and derived products like beef and leather)
• Palm oil (oil palm products, including derivatives like certain oleochemicals)
• Soy (including soybeans and soybean oil, largely used for animal feed)
• Wood (logs, timber, wood pulp, and items like paper, furniture, etc.)
• Cocoa (key ingredient for chocolate and cocoa butter)
• Coffee
• Rubber

Additionally, the law covers not just raw commodities but also products that contain, have been fed with, or have been made using them. For example, chocolate (which contains cocoa), printed paper, books, wooden furniture or packaging (from wood), tires (rubber), and leather goods (from cattle) are all covered. Even if the commodity is just an ingredient or used in production—like palm oil derivatives in cosmetics or cattle feed in meat production—the end product still falls under the regulation.

The full list of regulated products is detailed in Annex I of the EUDR, and the EU may update this list over time. Commodities like maize or biofuels are currently under review for potential inclusion in future updates.

The selection of these commodities is data-driven. They are among the top global contributors to tropical deforestation. For instance, EU imports of soy and palm oil have been linked to large-scale land conversion, as soy is widely used in animal feed and palm oil is found in a wide range of food and household products. By targeting these specific supply chains, the EUDR aims to reduce the EU's role in driving deforestation globally.

Who must comply?

The EUDR applies to two categories of market participants: operators and traders. While their roles and responsibilities differ, both are essential in ensuring only deforestation-free products enter or circulate within the EU market.

Operators

Operators are companies or individuals who place relevant commodities or derived products on the EU market or export them from the EU. This includes:

• Importers bringing covered goods into the EU
• EU-based manufacturers placing finished products on the EU market
• Any company, inside or outside the EU, that introduces a regulated product into the EU supply chain for the first time
  

Operators carry the primary responsibility for EUDR compliance. This means they must conduct and document full due diligence to ensure that products are deforestation-free and legally produced. For example, a coffee importer sourcing beans from Brazil is considered an operator and must trace those beans back to verified, compliant plots of land.

Traders

Traders are companies that make EUDR-regulated products available on the EU market, but are not the first to place them there. These include:

• Wholesalers
• Distributors
• Retailers
  

Traders have lighter obligations than operators, particularly if they are classified as micro or small enterprises. In most cases, they are required to:

• Ensure that upstream operators have completed due diligence
• Pass along relevant compliance information (e.g., due diligence statement references)
• Avoid placing non-compliant products on the market
  

Traders do not need to duplicate due diligence already done by operators, but they must ensure the integrity of the compliance chain.

Due diligence requirements: what companies must do

At the core of the EU Deforestation Regulation (EUDR) is a mandatory due diligence system. Any company placing or exporting regulated products to or from the EU must be able to trace its supply chain, assess risks of deforestation or illegality, and mitigate those risks before any goods can enter the market.

This due diligence process is built around three core steps:

1. Collect information

Companies must first gather detailed and verifiable information about each product and its supply chain. This includes:

• Geolocation coordinates of the plot(s) of land where the commodity was produced
• Date or time range of production
• Product type and quantity
• Supplier identity and relevant documentation
• Evidence that the land use complies with the regulation: i.e., that no deforestation has occurred since December 31, 2020, and that production followed the laws of the country of origin

For example, a coffee importer must be able to provide GPS coordinates for every farm that supplied the beans, show that those farms were not deforested after the cut-off date, and prove that local land use laws were followed. This plot-level traceability applies even if the product has passed through traders or processors. It also applies to multi-ingredient products—each relevant commodity must be traceable back to its source.

This level of granularity is new for many supply chains, particularly those involving smallholders or long distribution networks. But it forms the foundation for all downstream risk assessment.

2. Assess risk

Once the data is collected, the next step is to evaluate the likelihood that the product may be non-compliant. This risk assessment must be based on objective criteria, including:

• The complexity of the supply chain
• The prevalence of deforestation in the country or region of origin
• The presence of indigenous or customary land rights
• Corruption or governance issues in the source country
• Whether the product comes from a low-, standard-, or high-risk area, based on the EU’s upcoming benchmarking system

The regulation sets a high bar: only products with a “negligible risk” of being linked to post-2020 deforestation or illegality can be placed on the market. If the assessment shows anything more than negligible risk—or if the company cannot confidently rule out risk—then the product cannot move forward without further action.

This means companies must have systems in place to document their evaluations, justify their decisions, and demonstrate a clear methodology for reaching a “negligible risk” conclusion.

3. Mitigate risk

If the risk is not negligible, the company must take mitigation measures before proceeding. These may include:

• Requesting additional evidence or clarification from suppliers
• Conducting on-site audits or field inspections
• Using satellite imagery or other remote-sensing tools to verify land-use claims
• Shifting to alternative, verified suppliers or regions
• Seeking third-party verification or independent assessments
  

The goal of mitigation is to reduce the risk to negligible. If that can’t be achieved, the product must not be placed on the market.

All actions taken during this step must be documented in detail. Companies should be prepared to present this documentation to authorities during inspections or audits.

Submitting a due diligence statement

Once all three steps are complete, the operator must submit a due diligence statement through the EU’s centralized information system. This is a formal declaration that:

• Due diligence has been properly conducted
• The product meets the requirements of the regulation
• Supporting documentation is available upon request
  

The due diligence statement is legally binding and must be kept on record for at least five years. Companies must also ensure that all products placed on the market can be linked to a valid statement.

Ensuring traceability

One of the strictest aspects of the EUDR is its ban on the mixing of compliant and non-compliant products. This rules out common “mass balance” models used in some certification schemes, where certified and non-certified goods are blended and tracked in aggregate.

Under the EUDR:

• Commodities must be fully segregated if they are destined for the EU market
• Mixed-origin batches are not allowed unless every input source meets EUDR criteria
• Companies can aggregate inputs only if all contributing plots are individually verified as compliant
  

This pushes companies toward a segregated supply chain model, where only deforestation-free materials are pooled together. For example, a storage silo for soy can only hold EUDR-compliant soy if that batch is meant for the EU. This will require major changes in supply chain infrastructure and traceability systems for many operators.

However, the regulation does not require “identity preservation” (where each input is tracked from individual farm to final product). Aggregation is allowed—so long as all sources are proven compliant. Companies may need to use tools such as geospatial mapping platforms, blockchain traceability, or supplier management software to support this.

What about traders?

Traders, particularly smaller ones, have reduced obligations. If you’re a distributor or retailer buying from an operator:

• You do not have to repeat the full due diligence
• You must obtain and retain the due diligence statement or its reference from your supplier
• You must not trade in products you know—or should reasonably suspect—are non-compliant
  

Each actor in the chain must preserve the flow of information. By the time a product reaches the shelf, there must be a clear and documented trail back to the compliant plot of land.

Traders must still be ready to respond to regulatory inquiries and must cooperate with inspections. The heavy lifting—data collection, geolocation, risk assessment—is largely on the shoulders of the operator, but responsibility is shared across the chain.

What do you need to keep in mind?

The EUDR’s due diligence requirement is demanding but clear. It requires companies to:

• Trace products back to their origin at the plot level
• Assess the risk of deforestation or illegality
• Take corrective actions where needed
• Ensure full traceability and non-mixing
• Declare compliance via an official due diligence statement
  

For many businesses, this means investing in new systems, training staff, and working more closely with suppliers—often across borders and languages. But in return, the regulation offers a path to more sustainable, transparent supply chains.

Country risk classification: low and high risk countries

A unique feature of the EUDR is that it introduces a “benchmarking” system to classify countries (and sometimes specific sub-regions) by their deforestation risk level. The European Commission will assign each producing country a status of either low risk, standard (normal) risk, or high risk by the end of June 2025. These risk categories are meant to reflect how likely commodities from that area are to be associated with recent deforestation or illegal practices.

Low-risk countries

Commodities sourced entirely from low-risk areas can follow a simplified due diligence procedure. Companies must still collect all basic information—such as geolocation data—but they are not required to perform a detailed risk assessment or risk mitigation unless new information indicates a problem.

In practical terms, sourcing from low-risk countries reduces the compliance burden significantly. However, companies cannot skip due diligence entirely. If warning signs arise, they must investigate fully.

High-risk countries

Products from high-risk areas face enhanced scrutiny. Risk assessments for these commodities will almost certainly identify more than negligible risk, meaning companies must take additional mitigation steps—such as conducting independent audits, using satellite verification, or gathering extra evidence from suppliers.

Additionally, operators sourcing from high-risk countries are more likely to be audited by authorities. Member States are required to inspect at least 9% of operators sourcing from high-risk areas annually, compared to 3% for standard-risk and 1% for low-risk origins.

Standard-risk countries

Most countries will likely be classified as standard risk at first. For these, companies must perform full due diligence, including a thorough risk assessment and mitigation measures when necessary.

Why the benchmarking system matters

The goal of country classification is to incentivize better forest governance. Countries with low deforestation rates and strong enforcement can benefit from low-risk status, making it easier for their producers to trade with the EU.

On the other hand, countries associated with rampant deforestation may face trade disadvantages unless practices improve. This aspect has been somewhat controversial, with concerns about the political nature of grading countries. To ensure objectivity, the Commission intends to rely on transparent, data-driven criteria like satellite monitoring.

For companies, country risk level will directly influence the complexity of compliance. Sourcing from low-risk countries will simplify processes, while high-risk sourcing will require additional checks, documentation, and potentially higher costs.

Until the official risk list is published in 2025, companies should continue assessing risk based on known deforestation data, governance indicators, and their own supply chain visibility.

Regardless of the country’s status, due diligence remains mandatory: low-risk classification simplifies the process, but it does not remove the need for traceability and information gathering.

Enforcement and penalties

A regulation is only as good as its enforcement. Under the EUDR, EU Member States are responsible for enforcing the law through their designated competent authorities (for example, customs authorities, environmental agencies, or other regulators appointed at the national level). These authorities will conduct checks on companies to ensure they are complying with the due diligence requirements and not placing non-compliant products on the market.

How will enforcement work? Competent authorities will use a mix of audits, document reviews, and possibly on-the-ground inspections. They may:

• Check due diligence statements and reports: Authorities can request to see the due diligence documentation a company has for a particular shipment or product. They might examine the geolocation data, the risk assessment records, etc., to verify that the company indeed did what the law requires.
  
  
• Physical inspections: At border points or warehouses, they may inspect shipments. There are minimum inspection rates: at least 1% of operators annually (overall), 5% for those trading timber (given the EUTR experience), and higher percentages for high-risk sourcing operators. They might also use satellite data or cooperation with third countries to spot-check if a given batch truly comes from a non-deforested plot.
  
  
• Follow up on complaints (“substantiated concerns”): The EUDR allows third parties (NGOs, civil society) to submit concerns if they have evidence a company is violating the rules. Authorities must investigate these substantiated concerns, which can tip them off to problems in the supply chain.
  
  
• Cooperate across borders: Since it’s an EU-wide regulation, authorities in different Member States will share information. If a non-compliant shipment is found in one country, that information can be used to prevent it in another, etc.

If a company is found to violate the EUDR – for example, if it placed products linked to deforestation on the market, or if it failed to exercise proper due diligence – there are significant penalties mandated by the regulation. The exact penalties are set by each Member State’s national laws, but the EUDR establishes some minimum criteria for those penalties:

• Fines: These must be “effective, proportionate and dissuasive.” The law suggests fines be linked to the environmental damage and the value of the goods. It explicitly mentions fines can be up to 4% of the company’s annual turnover in the EU for the preceding year. For large multinationals, this could mean tens or hundreds of millions of euros in the worst cases.
  
  
• Confiscation of goods and profits: Authorities can seize the relevant products (e.g. confiscate a shipment of timber or coffee proven to be from illegal deforestation). They can also confiscate the profits made from selling such goods. This prevents companies from simply profiting off non-compliance.
  
  
• Exclusion from public contracts and funding: A company violating the EUDR can be excluded from public procurement tenders or denied access to public financial support (grants, loans, etc.) for up to 12 months. This is another strong deterrent, as losing eligibility for government contracts can impact business revenue.
  
  
• Temporary ban from the market: Authorities can impose a temporary prohibition on the company, preventing it from placing any of the relevant commodities on the EU market for a certain duration. Essentially, a company could be barred from trading those goods in Europe for a period if it breaks the law.

These enforcement tools mean that non-compliance is a serious risk. It’s not just a slap on the wrist; it can materially affect a company’s finances and ability to do business in the EU. The reputational damage would be significant as well – being publicly called out for contributing to deforestation can harm a brand in the eyes of consumers and investors (many of whom are increasingly focused on ESG performance).

It’s also worth noting that Member States will likely increase customs checks on imports of the covered commodities. Importers may have to provide the due diligence statement reference at customs clearance. If a product lacks the required statement, it shouldn’t be allowed in. Some countries might create risk-based import controls, scanning documentation for high-risk origin goods more closely. Over time, as the EU implements digital systems for this regulation, enforcement may become more automated (e.g. automated cross-checks of coordinates with satellite maps).

One challenge for enforcement will be ensuring consistency across all EU countries. The European Commission will play a coordinating role and issue guidance (they have already started releasing detailed guidance and FAQ documents to harmonize how countries apply the rules. The goal is to avoid a situation where one country is lax and another is strict, which could lead to loopholes. A centralized information system for due diligence statements is also in the works, which will aid oversight.

Challenges and considerations for SMEs

Implementing the EUDR will be challenging for many companies, but small and medium-sized enterprises (SMEs) may face particular hurdles. SMEs often have limited resources (both financial and human) to devote to complex compliance tasks, yet they are expected to follow the same core requirements of traceability and risk assessment.

1. Compliance costs

One concern is the cost of setting up and running due diligence systems. This includes expenses for mapping supply chains (possibly hiring consultants or purchasing satellite data services), upgrading IT systems to handle traceability data, training staff, and perhaps certifying or auditing suppliers. While larger multinationals can spread these costs over high revenue, SMEs might feel the pinch more. 

However, some recent studies offer a bit of optimism. A 2024 study by consultancy Profundo examined companies of various sizes and estimated that EUDR compliance would cost on average about 0.1% of annual revenues. For large companies it was around 0.06% of revenue, and for SMEs about 0.17% of revenue. In relative terms, that means SMEs could spend nearly three times more of their revenue on compliance than big firms, but in absolute terms it’s still under 0.2% of sales on average. 

As a percentage of profits, the study even found SMEs might spend slightly less than big firms (since many small companies have higher profit margins in percentage terms).That said, costs can vary widely. A small company sourcing a simple product from a low-risk country will spend far less than one sourcing multiple commodities from high-risk regions. For some SMEs, especially those dealing with many smallholder farmers or complex supply chains, the upfront investment could be significant.

SMEs also often lack in-house sustainability or compliance departments. Hiring new staff or consultants to handle EUDR due diligence is a cost and logistical challenge. There’s a risk that some SMEs, especially outside the EU, might decide to stop selling to the EU rather than deal with the hassle. 

2. Traceability and data collection

The requirement to obtain precise geolocation coordinates for every farm or plot in the supply chain is unprecedented and could be daunting for SMEs. Many small companies simply don’t have visibility beyond their direct supplier. For example, a small chocolate maker in the EU might buy cocoa from a trader and have no direct contact with the thousands of cocoa farms that ultimately supply those beans. Now, that chocolatier needs to somehow get farm-level data. This means SMEs will need to engage their suppliers assertively – asking wholesalers or middlemen to provide origin information, or to restructure deals so the data is included. Some suppliers might be reluctant or not have the info readily (imagine an exporter who buys from many small farms in Ivory Coast – they might not have GPS coordinates for all). Traceability technology can help, but adopting it has a learning curve. There are emerging solutions like blockchain traceability platforms, satellite monitoring tools (e.g. European Space Agency or private providers offering deforestation alerts), and supply chain mapping services which SMEs can use, often via third-party service providers. The challenge is knowing which solution to choose and affording it.

Additionally, language and education could be a barrier. An SME dealing with rural farmers might need to educate their upstream partners on why geolocation is needed and how to capture it (e.g. using a smartphone GPS). Data reliability is another concern – if an SME is given false coordinates or incomplete info by a supplier, they could unknowingly be non-compliant. So verifying data (maybe via satellite imagery or audits) becomes important, yet that’s again a challenge for a smaller firm with limited bandwidth.

3. Supply chain complexity

Some SMEs deal with simpler supply chains (maybe a single raw material from one country). Others might have very complex ones. Consider an SME that makes specialty food containing cocoa, palm oil, and coffee – three high-risk commodities potentially from multiple countries. They will need to trace each of those ingredients. 

If any ingredient passes through commodity trading houses where mixing occurs, the SME must ensure segregation. Because the EUDR disallows mixing with unknown sources, SMEs may need to pressure their suppliers to implement segregation for their orders or switch to suppliers that can provide segregated deforestation-free supplies. This could lead to higher ingredient prices, which is another indirect cost.

4. Financial and technical support

SMEs might need external support to comply. This could include joining industry initiatives or certification schemes that provide traceability systems. For instance, there are certification bodies for sustainable palm oil (RSPO) or cocoa (Rainforest Alliance) that, while not automatically EUDR-compliant, can be part of the solution. 

SMEs could also collaborate – a group of SMEs sourcing from the same region might share the costs of a satellite monitoring service or collectively fund a local auditor. The EU has hinted at working with partner countries to facilitate compliance.

5. Awareness and preparedness 

Many SMEs are simply not yet aware of the EUDR or don’t fully understand its implications. Larger companies have legal teams tracking EU regulations, but a small company might not know they need to collect geocoordinates next year for their coffee imports. This knowledge gap is a challenge in itself. 

In the lead-up to the deadlines, there’s a need for outreach and education targeted at SMEs. Trade associations and chambers of commerce are starting to play a role in disseminating information. Compliance teams in bigger companies might also need to support smaller suppliers by explaining requirements clearly.

How the EUDR complements other EU sustainability policies

The EUDR is part of a much larger framework of policies designed to make supply chains more sustainable and reduce environmental harm. Understanding how it fits into this broader context can help companies align their compliance efforts and streamline their sustainability strategies.

1. European Green Deal and Biodiversity Strategy

The EUDR was developed under the European Green Deal, the EU’s plan for achieving climate neutrality by 2050. It directly supports goals laid out in initiatives like the EU Biodiversity Strategy for 2030 and the Farm to Fork Strategy, which call for reducing the EU’s environmental footprint and protecting global forests.

In essence, the EUDR acts as the enforcement tool for these ambitions—turning policy commitments into binding obligations for companies.

2. Corporate Sustainability Due Diligence Directive (CSDDD)

The upcoming CSDDD will require large companies to conduct due diligence on a broad range of human rights and environmental impacts.

While the CSDDD has a wider scope—covering issues like labor rights and pollution—the EUDR offers a more specific and detailed framework for addressing deforestation. Companies can leverage EUDR systems, like supply chain traceability and risk assessments, to meet broader CSDDD requirements and build integrated compliance structures.

3. Corporate Sustainability Reporting Directive (CSRD)

The CSRD, which took effect in 2024 for large companies, mandates comprehensive reporting on environmental and social issues, including supply chain risks.

Data collected for EUDR compliance—such as deforestation risk assessments and mitigation actions—can feed directly into CSRD reporting.

Aligning EUDR actions with CSRD disclosures helps companies build a more coherent and credible sustainability narrative.

4. EU Climate Policies

Forests are critical carbon sinks. By reducing deforestation linked to EU consumption, the EUDR supports the EU’s climate goals, including the "Fit for 55" package and the LULUCF Regulation (Land Use, Land Use Change and Forestry).

The expected reduction of 32 million tonnes of CO₂ per year through the EUDR significantly contributes to meeting the EU’s Paris Agreement targets.

In the future, deforestation-free sourcing could also influence carbon accounting frameworks like the EU Emissions Trading System and the Carbon Border Adjustment Mechanism (CBAM).

6. Global Biodiversity Framework

Internationally, the EUDR supports the goals of the Kunming-Montreal Global Biodiversity Framework, particularly the commitment to conserve 30% of land by 2030.

Preparing for compliance: a practical checklist for companies

If your company is affected by the EUDR, early action is essential. Here's a clear roadmap to get ready:

1. Assign responsibility and align internally

• Identify a compliance lead or team for EUDR.
• Integrate EUDR compliance into existing sustainability, procurement, and risk management policies.
  Ensure top management is informed and supportive — resource allocation will be critical.
• Train key departments (procurement, compliance, legal, logistics) on EUDR basics and obligations.
  

2. Determine scope and responsibilities

• Identify products containing or derived from EUDR-regulated commodities (cattle, palm oil, soy, wood, cocoa, coffee, rubber).
• Define your role: operator (placing products on the EU market) or trader (selling already-placed products).
• Map where EUDR-relevant materials appear in your supply chains.
  

3. Review sourcing and engage suppliers

• List sourcing countries and regions.
• Research deforestation risks for each origin.
• Begin conversations with suppliers to:
  
  • Request geolocation data (GPS coordinates) and production dates.
  • Ensure understanding of EUDR compliance expectations.
  • Update contracts to require deforestation-free sourcing and information sharing.
• Prepare to go beyond direct suppliers if necessary (e.g., trace to farm or plantation level).
  

4. Build your due diligence system

• Create standardized templates for data collection.
• Set clear internal workflows for:
  
  • Supplier onboarding and assessment
  • Risk evaluation and approvals

• Choose secure data storage solutions (minimum five-year record retention).

• Prepare for due diligence statement submissions through the EU system.
  

5. Implement traceability and risk assessment technology

• Invest in tools such as:
  
  • Satellite monitoring and deforestation alerts
  • Geospatial supply chain mapping
  • Blockchain or digital chain-of-custody solutions
• Use technology to verify that sourcing areas were not deforested after December 31, 2020.
• Develop a risk assessment matrix incorporating factors like:
  
  • Country risk level
  • Commodity-specific risk
  • Indigenous rights presence
  • Supply chain complexity

• Define clear mitigation actions (e.g., field audits, switching suppliers) when risk is not negligible.
  

6. Manage geolocation and data properly

• Link each shipment or product batch to specific origin coordinates.
• Aggregate farm-level data carefully when dealing with many smallholders, while ensuring full traceability.
• Prepare systems to feed geolocation data into EU reporting portals when required.
  

7. Document everything systematically

• Maintain digital files with:
  
  • Supplier declarations
  • Geolocation proofs (maps, coordinates)
  • Risk assessments
  • Mitigation steps taken

• Ensure quick access to documentation in case of audits or reporting needs.
  

8. Pilot and refine

• Use 2024 and early 2025 to pilot your processes on selected supply chains.
• Test collection of geolocation data, risk assessments, and due diligence statement submissions.
• Identify gaps and improve workflows before the EUDR obligations go live.
  

9. Stay updated and flexible

• Monitor EU guidance updates, national authority interpretations, and risk benchmarking announcements.
• Adapt systems as regulations evolve or new commodities are added.
• Watch for opportunities to integrate EUDR compliance with broader sustainability initiatives (CSRD, CSDDD, ESG reporting).
  

10. Leverage synergies and external expertise if needed

• Align EUDR work with other compliance projects (e.g., ethical sourcing, human rights due diligence).
• Consider collaborating with industry initiatives, consultants, or traceability solution providers to accelerate readiness.

The path forward: turning compliance into opportunity

The EU Deforestation Regulation marks a major shift toward transparent, responsible supply chains. It doesn’t ban trade—it steers it toward sustainability.

Companies that prepare early can turn compliance into an opportunity, gaining competitive advantage and securing their place in a future where deforestation-free sourcing will be the norm.

The EUDR also supports Europe’s wider climate and biodiversity goals and is likely to set a global standard, with similar rules emerging in the UK and US.

For businesses, acting now isn’t just about avoiding penalties—it’s about building resilient, future-proof operations. Those who adapt early will lead the change toward a more sustainable global economy.