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EU Deforestation Regulation: While implementation could be further delayed, EUDR is already enhancing supply chain practices
Introduction
The EU Deforestation Regulation (EUDR) was formally adopted in 2023 and has repealed the EU Timber Regulation. It was established with the primary goal of minimizing the EU's contribution to global deforestation related to EU consumption of certain commodities (cattle, cocoa, coffee, oil palm, rubber, soy and wood). EUDR ambitious scope would indeed represents a major evolution in soft commodities’ supply chains management, being the first legally binding framework to tackle the issue of deforestation at the level of importation transactions with a global outreach. Its full application, designed to support its wider objectives to combat climate change, to protect biodiversity and the rights of indigenous communities, could, alone, allow a reduction of about 1% of EU absolute CO2 emissions (vs 2021), contributing up to 0.7% to the EU 2030 target (-55% vs 1990).
Its implementation unfolds amid significant operational complexity: it has been already postponed by one year (to December 2025) due to delays in regulatory guidance. The EU Commission has been under significant pressure to further simplify the EUDR. It is now considering another setback in the application date, due to insufficient dedicated IT system capacity. However, faced with the challenges to adopt high-precision traceability systems, advanced technologies and robust risk management tools, many companies have already invested, prepared and adapted. In practice, the application of the EUDR appears to be already transforming corporate practices throughout the value chain and among various stakeholders on a large scale.
The EUDR is pioneering in demanding rigorous due diligences of supply chains tied to critical commodities and their byproducts[OA1] [CM2] (all products that contain, have been fed with, or have been made using critical commodities).
The founding principles of the Deforestation Regulation lie in the respect of 3 conditions for certain commodities or products to enter the EU or be exported from it:
o Be deforestation-free from 31/12/2020. The definitions of deforestation and forest used by the EU is one provided by the UN Food and Agriculture Organization (FAO), which may differ from that of some producer countries[1] and be stricter. For example, Brazil’s definition of "forest", guided by the country's Forest Code[2], does not provide a singular, comprehensive and quantitative definition of "forest"; it rather gives qualitative attributes and also allows for “legal deforestation”, subject to competent authorities’ approval[3]. As a result, what can be deemed legal in Brazil may not comply with the EU Deforestation Regulation.
The cut-off date set at 31 Decembre 2020, although less ambitious than the cut-off date already used in previously existing labels and deforestation-related frameworks (that were considering earlier dates such as 2014 or 2015), has already become a reference. It applies retroactively to land subjected to deforestation or forest degradation after 31 December 2020.
o Be legally produced, i.e. in accordance with the relevant legislation of the country of production, taking however into account the above-mentioned preeminence of the EU-FAO deforestation definition;
o Be covered by a due diligence statement (DDS).
The scope and coverage of the DR in terms of commodities and operators is particularly exhaustive and therefore potentially both demanding and impacting.
All operators placing commodities or products covered by the EU DR (see below) on the EU market or exporting from it are in scope. Applying uniformly to EU and non-EU operators, the regulation was designed to close the loopholes in voluntary schemes and prevent free riders in supply chains. Covering seven key deforestation-related commodities and derived products, it should cover more than 90% of EU-driven deforestation according to the EU Commission.
The scope and coverage of the Deforestation Regulation
If a company places a relevant commodity or product on the market or exports them, it is considered an operator under the EUDR. An operator can be the company that harvests wood and then sells it, but an operator can also be the company that processes wood and then sells a relevant product (e.g. tables) and places this product for the first time on the EU market
Source: Authors
The backbone of the text is the Due Diligence Statements, whose level of sophistication and control depend on the level of risk associated with the country of importation defined by the Country Benchmark
Countries of importation are classified according to three levels of risks by the EU Commission (low, standard and high), that determines both:
- the level of due diligence checks to be performed at the level of the operator: low-risk countries require only gathering of data and information (1 out of the 5 due diligence requirements provisioned by the EUDR);
- the minimum share of operators’ compliance checks to be performed at the level of Member States’ customs inspection: high risks countries are subject to a higher level of custom checks at borders (9% of operators) compared to standard-risk countries (3%) and low-risk countries (1%).
Due diligence requirements per country of origin
Source: Authors
Initially based on the level of deforestation risks (article 29 DR), the country benchmark finally published by the EU Commission is also derived from geopolitical considerations and taking stock of the observed impossibility to concretely implement the required due diligences. Consequently, four countries have been classified as high risk (Belarus, Myanmar, North Korea and Russia) while about 50 countries have classified as standard-risk countries (with historically high deforestation levels but no active international sanctions, like Brazil, Indonesia, Bolivia, and Democratic Republic of Congo). The level of due diligence required for standard-risk countries is the same as for high-risk countries. However, the retained classification has not reached consensus so far, with a non-binding resolution by the EU Parliament rejecting it, increasing the pressure on the EU Commission to introduce further amendments over the coming months.
The preparation of the due diligence statement requires sophisticated controls
The information requirements, that are to be gathered for all commodities whatever the level of risks of the country or origin, shall cover :
o the description of the relevant products, the quantity and country of production
o the geolocation of all plots of land where the relevant commodities contained, used or produced for the product were grown as well as the date or time range of production; the geolocation of the plot may require the use of satellite imagery;
the identification of suppliers and clients;
the information that the relevant commodities are deforestation-free.
The risk assessment requires operators to indicate that the risks of non-compliance is “absent or negligible”. “Negligible” risk has not been defined by the European legislator but can be considered only as a result of a full due diligence[4] and is not as such linked to the level of risk assigned to the country of origin.
Companies must annually register their due diligence statements via the EU’s information system (e.g., TRACES registry[5], available here) and make use of automated tools for compliance. The late launch of the IT registry, in December 2024, has been a major factor of the EUDR one year application delay. While the IT system has been launched since then, running and tested for several months, the number of transactions to be handled has been “substantially reassessed” by the EU Commission to many more. Thiscould “lead to the system slowing down to unacceptable levels or even long-lasting disruptions which could negatively impact companies and their possibilities to comply with the EUDR” according to Jessika Roswall, Environment Commissioner in a letter to Antonio Decaro, chair of the European Parliament’s environment committee.The issue would, according to the Commission, justify another one-year delay (Dec. 2026) in the application of the EUDR. For the postponement to take effect, the EU Commission must publish a formal proposal and submit it to negotiations and approval by the EU Parliament and the Council. A timeline for these legislative steps is not confirmed yet.
How does it work concretely, the example of the EU chocolate bar
Source: EU commission
While large and medium companies must now comply by 30 December 2025, and micro and small enterprises must do so by 30 June 2026, companies are getting prepared. Faced with the challenge of traceability, many have already changed their supply chain management practices to increase the robustness of their controls, either through tech-driven or governance-based solutions.
· Tracing the chain to the plot geolocation
The geolocation requires operators to identify the country and coordinates (latitude, longitude) of the relevant plot of land for each commodity they place on the EU market. Before even making any deforestation-related verification, this requires a precise identification of the exact origin of the commodities purchased, which can vary very much within a single consignment. This proves particularly challenging when the supply chain involves up to 6-7 intermediaries[6], as it is the case for instance for rubber with collectors, dealers, processors, traders… making traceability highly complex. Companies like Michelin have to deal with a supply chain where 85% of the global natural rubber production originates from millions smallholder farms with an average surface area of 2 to 3 Ha. Michelin has therefore collaborated with its natural rubber subsidiaries, joint ventures, and suppliers, deploying a dedicated digital mapping tools (Rubberway) to pinpoint the locations of its supply chain at the farm level and gather geographic coordinates for millions of rubber plantations.
Producer countries have also in some cases contributed to provide governance-based solutions. The EU has, for instance, initiated policy dialogues on sustainable cocoa with Ghana, Ivory Coast among others[7]. These have launched traceability schemes (e‑ID cards, mapping) to support cocoa producers. Peru developed a Digital Identity App to register producers and plots. Challenges remain especially as the effective deployment of such systems remains constrained by limited financial resources and adoption by local stakeholders. In the absence of fully functional and accessible national system, other sources of information may be used by stakeholders and contradictory data may circulate, potentially creating confusion as to the state of deforestation of countries. Access to historical information on land-use changes is also often limited, although needed under the EUDR. Countries with data gaps, weak or poorly titled land render access to the EU market more complicated for small producers, such as Ethiopian coffee farmers[8].
Satellite verification of non-deforestation
Once plots are identified, they can be matched with satellite imagery. The track record allows to check whether the plot was a forest or not before 2021. One can do it manually or train a machine to allow for automatic recognition of a change in land use based on a track record of satellite imagery. Such satellite imagery is publicly available thanks to the European Spatial Agency and the like (e.g. Copernicus available here).
As an example, the image below allows for a human eye to detect, whether or not, some plots have been deforested after the cut-off date. Although it is not enough, this step is essential to the due diligence process and allows for a verification at scale.
Securing due diligences from the producer to the arrival on the EU market
If identified as EUDR-compliant, commodities must be segregated to secure the entire value chain. Suppliers must re-organize in consequence. Silos, containers and boats may be dedicated to the EUDR compliant commodities usually transported in bulk. Several solutions are already used and observed in practice:
- blockchain and digital ledgers to secure each handover. For example, TraceX and TrusTrace enable end‑to‑end traceability; platforms like OPTEL’s Optchain integrate with EU registries to simplify compliance workflows;
- Physical segregation of compliant shipments, through dedicated containers or GS1-coded batches[9], to ensure securitization until customs controls.
In practice, a number of companies report that the EUDR is already creating segregated and secured supply chains towards the EU.
While traceability and knowledge of supply chains has already proven indispensable to prepare for the application of the EUDR, the regulation may have more profound and long-term impacts on the supply chain management of corporates. Beyond traceability, demonstrating compliance also requires ensuring good practices.
The choice of suppliers, along with the use of certifications and technical support will become even more central. Corporates may change providers according to their capability to demonstrate their EUDR alignment. To date, the impact of the EU DR on small farmers and producers remains to be unfolded: On the one hand, increased traceability and dedicated supply chains may create a premium on EUDR compliant commodities, from which small farmers could benefit; on the other hand, they could be dropped for larger suppliers demonstrating compliance more easily. The use of sustainable sourcing certifications, be they in-house or external, such as RSPO, FSC, Rainforest alliance, etc. can bring small farmers and producers the necessary technical assistance needed. For example, The Rainforest Alliance[10] has set up systems to support producers and supply chain actors to meet the requirements of the EUDR. Some corporates are also accompanying and training smallholder farmers towards the integration of sustainable practices to reduce deforestation and degradation risks.
Corporates may also favor more in-depth reorganizations of their supply chains, favoring geographies where deforestation risks are minimum. When feasible, corporates may be incentivized through the regulation, to source from low-risk countries rather than from medium to high-risk countries, therefore re-routing trade and potentially exercising higher pressure on low-risk countries’ land use.
While corporates reactions to the EUDR have proven mitigated (some industry fearing it could influence commodity prices and disrupt trade), the regulation might still be at the center of the political debate in Brussels in the coming weeks, with ongoing questions on its potential inclusion in the EU’s upcoming environmental Omnibus that should revamp an unknown number of environmental legislations. On the ground though, efforts to prepare and comply are already changing supply chains in a concrete manner. Many corporates for which business rely on EUDR critical commodities have invested substantial amounts of time, money and technical capacities to trace back to millions of plots. Demonstrating that enhanced supply chain management practices and traceability, although challenging, is possible and already happening.
Footnotes
[1] The FAO definitions of Forest and Deforestation, which may differ from Producer countries’ own legal definition and challenge their sovereignty: production deemed legal may be illegal for the EU
o Deforestation = “the conversion of forest to agricultural use, whether human-induced or not”
o Forest = “land spanning more than 0,5 hectares with trees higher than 5 meters and a canopy cover of more than 10%, or trees able to reach those thresholds in situ”
[2] Law no. 12.651/2012
[3] It defines “legal deforestation: subject to authorization from competent authorities and requiring reforestation as environmental compensation”.
[4] As per articles 4(1), 8 and 10(2)
[5] TRACES is the European Commission's online platform for animal and plant health certification required for the importation of animals, animal products, food and feed of non-animal origin and plants into the European Union, and the intra-EU trade and EU exports of animals and certain animal products.
[6] Forest Trends (2022): Report on Rubber Supply Chains
[7] See for example : Cocoa Insight – September 2025 - Preparedness check of Côte d’Ivoire’s for the EUDR
[8] Coffee, how rules made in europe put ethiopian farmers at risk, The Guardian
[9] GS1 barcodes are globally recognized barcodes that adhere to a global system of standards. These barcodes contain key identifiers and attributes, such as Global Trade Identification Numbers (GTINs), locations, shipments, serial and batch numbers, and dates
[10] The Rainforest Alliance EUDR alignment (available here)
