EUDR – What It Means, Who Is Affected, and Why You Must Act

The European Union Deforestation Regulation (EUDR) is a new law aimed at reducing the EU’s role in global deforestation and forest degradation. Coming into force on 30 December 2024, it applies to companies placing specific products on the EU market or exporting them from it.

Covered Commodities

Seven high-risk commodities fall under the regulation:

• Cattle
• Cocoa
• Coffee
• Palm Oil
• Rubber
• Soy
• Wood

It also includes a broad range of derived products, such as chocolate, leather, furniture, books, and packaging materials.

To comply, companies must ensure that their products are:

• Deforestation-free, based on land use after 31 December 2020
• Legally produced, according to local laws in the country of origin

Accompanied by a Due Diligence Statement (DDS), which must include verifiable geolocation data for the plots where commodities were produced (European Commission)

From 30 December 2025, enforcement begins in full — at which point companies must prove that all relevant products meet these criteria (White & Case).

Deforestation is responsible for about 11% of global greenhouse gas emissions — more than the emissions of all global passenger vehicles combined. Forests are essential carbon sinks, and their destruction severely undermines efforts to limit global warming.

For manufacturers committed to net-zero targets or ESG reporting under frameworks like CSRD, eliminating deforestation from supply chains isn’t optional — it’s essential. EUDR compliance directly supports science-based emissions reduction targets and long-term climate resilience.

The EUDR applies to all companies — large and small — that operate in or trade with the EU and handle regulated commodities. It makes no difference whether you are:

• Sourcing raw materials for production,
• Importing finished goods into the EU,
• Selling within the EU, or
• Exporting out of the EU to other markets.

The regulation has significant implications for manufacturing companies in sectors such as:

• Food & Beverage (e.g., chocolate, coffee, dairy, meat),
• Packaging and Paper (e.g., cartons, print products),
• Furniture and Wood Processing,
• Automotive and Transport (e.g., leather or rubber components),
• Chemicals and Consumer Goods (e.g., palm oil-based ingredients in cleaning or cosmetic products).

Whether you're at the top of the supply chain or closer to the consumer, if your products contain any EUDR-listed raw materials, you're in scope.

Key Functions Impacted

• Sustainability – accountable for environmental performance and ESG reporting
• Procurement – responsible for due diligence, supplier engagement, and risk data
• Supply Chain – tasked with traceability, logistics, and supplier relationships
• Legal & Compliance – ensuring regulatory alignment and handling enforcement risk
• Executive Leadership – owning strategy, risk, investor relations, and growth

The EUDR touches virtually every department in companies with global value chains — and is especially relevant in manufacturing industries that rely on agricultural, forest-based, or natural raw materials. According to industry estimates, the regulation impacts trillions of euros in trade across these sectors

The EUDR is legally binding and backed by serious enforcement powers. Non-compliance isn’t just a reputational issue — it’s a direct business risk.

Fines and Financial Exposure

Companies may face fines of up to 4% of their annual EU turnover, as well as product confiscation and permanent exclusion from the EU market (Deloitte). These penalties apply not only to products linked to deforestation, but also to failures in documentation — such as missing or incorrect DDS filings.

Import and Export Bans

Authorities have the power to block shipments at the border. Even a single non-compliant farm plot can result in an entire container or batch being denied entry — a risk made real by findings that 2% of farm plots show signs of deforestation and 1% have legality issues.

Production Stillstand

For manufacturers with just-in-time supply chains, blocked shipments can lead to factory downtime, missed orders, and broken SLAs. The risk is particularly high in commodity-dependent sectors like cocoa, soy, and palm oil.

Compliance Costs

While the cost of compliance is manageable, it is not negligible. For large companies, EUDR implementation is expected to cost around 0.1% of revenue and 1.45% of operating profit. For SMEs, this rises to 0.17% of revenue. Early investment in systems and supplier collaboration will reduce long-term costs and risks.

1. Supply Chains Take Time to Map

Plot-level geolocation and legality verification cannot be retrofitted overnight. Supply chain mapping, particularly in tier 2–3 regions, requires early and sustained supplier engagement.

2. Avoid Disruption and Loss

Last-minute preparation could lead to shipment blocks, supply shortages, and customer dissatisfaction — particularly for EU-bound production runs and critical components.

3. Build Trust and Future-Proof

Demonstrating compliance early will not only reduce risk, but strengthen supplier relationships and enhance brand equity with environmentally conscious consumers and investors.

1. Conduct a Risk-Based Supply Chain Assessment

• Identify which commodities and suppliers are in scope
• Map out geographies with known deforestation or legal compliance risks

2. Engage Suppliers Proactively

• Communicate expectations clearly
• Begin collecting required documentation and geolocation data

3. Invest in Traceability Systems

• Use technology such as GIS, satellite imaging, or blockchain to track commodity origins
• Integrate with procurement and ERP systems for real-time verification

4. Align Internally

• Create cross-functional governance involving Legal, Sustainability, Procurement, and Supply Chain
• Appoint EUDR leads to own the transition roadmap and reporting

The EUDR is not just a compliance problem — it is a strategic priority that intersects with revenue protection, risk management, and ESG leadership.

Revenue and Market Access

With up to 4% of EU turnover at risk and the possibility of exclusion from one of the world’s largest markets, EUDR demands board-level attention.

Investor and Regulatory Expectations

Institutional investors and regulators now expect companies to demonstrate climate and nature-related risk mitigation — including deforestation.

Supply Chain Resilience

Failure to adapt now could result in raw material shortages, operational standstills, and long-term competitive disadvantage.

Reputation and Leadership

EUDR compliance positions your brand as a responsible, forward-looking leader — a critical asset in stakeholder-driven markets.