The EU Deforestation Regulation, or EUDR as it’s now widely referred to, came into force at the end of 2023. Since then, the business community — or, to be more precise, those firms involved in sourcing or trading commodities like soy, beef, palm oil, timber, cocoa, and coffee — has been contending with a regulatory shift that feels, at times, deceptively simple on paper. The basic requirement, after all, is clear: these products must be deforestation-free. But clarity in principle doesn’t always translate to clarity in execution. And it’s that gap, between the stated aim and the operational reality, that many companies are now trying to navigate.
At its heart, the EUDR obliges firms to conduct due diligence. That phrase — “due diligence” — sounds familiar, perhaps even reassuring. But under this regulation, due diligence means something specific. It means firms need to know, and to show, that their goods have not contributed to deforestation or forest degradation after December 31, 2020. This isn’t, as some might have hoped, a matter of signing a declaration or updating a policy statement on the company website. The regulation requires concrete evidence. And this, as many are now discovering, is where the real work begins.
The starting point, for most, is geolocation data. This requirement — to collect and retain precise coordinates for the land where the commodities are produced — has introduced, for many businesses, a level of data collection that they hadn’t previously contemplated. And while large suppliers in well-documented regions may be able to provide this information with relative ease, the situation is often less straightforward elsewhere. Smaller producers may lack the tools, the knowledge, or in some cases even the trust needed to share such details. There’s a certain tension here, one that’s not always easy to resolve. Companies are finding themselves in the position of needing to insist on this data, while also trying to maintain relationships that are, let’s face it, built on more than just compliance.
And what happens when the data is collected? That’s where verification comes in. Businesses must cross-check supplier coordinates against deforestation-risk information — using open datasets, satellite imagery, and other land-use monitoring tools that, while invaluable, are not without their limitations. Data quality varies from region to region. Updates are not always as timely as one might hope. Satellite coverage, while vastly improved over the years, still leaves room for uncertainty in certain areas. And interpreting this data, turning it into something actionable, is not always as straightforward as guidance documents might imply. Some companies have found themselves facing difficult choices when the evidence is inconclusive, weighing the reputational and legal risks of proceeding against the costs of walking away.
There’s been no shortage of discussion, either, about technology’s role in all of this. Blockchain, in particular, has been the subject of much enthusiasm in some quarters — or at least of hope. The idea of an unchangeable digital ledger that records every transaction along a supply chain certainly has its appeal. But the reality, as often happens with technology, is more complex. Adoption has been uneven. Integration into existing procurement systems is not always smooth. And the underlying issue remains: technology can secure data, but it can’t improve data that is flawed or incomplete at the point of entry. That, fundamentally, is a human and organisational challenge.
Internally, companies are adjusting their processes — or trying to. Procurement teams, legal departments, compliance officers, sustainability specialists, IT — all are involved in efforts to embed traceability checks into purchasing procedures. Contracts are being revised, workflows updated, systems retooled, or at least that is the aim. But progress is rarely linear. Systems that were never designed with such detailed traceability in mind can creak under the strain. Departments that have historically operated in parallel now need to collaborate more closely. This takes time. It also takes a kind of internal cultural shift that, if we’re honest, can be harder to achieve than technical fixes.
There’s also a broader question that is, increasingly, being raised by industry groups, NGOs, and policymakers alike. What will this mean for smallholder producers? The concern — one that was anticipated by some, though perhaps underestimated by others — is that buyers, seeking to reduce compliance risk, will favour large-scale suppliers who can more easily provide the required data. This could, over time, reshape sourcing patterns in ways that may not have been intended by the regulation’s architects. It is difficult to say, at this point, how significant this effect will be. The data is still emerging. But it is a dynamic worth watching, and one that raises uncomfortable questions about the trade-offs involved in regulatory design.
Firms today find themselves somewhere between commitment and uncertainty. The goals of the EUDR are understood, and there is — broadly speaking — alignment around those goals. But translating them into day-to-day operations, building the systems, processes, and relationships needed to make compliance real, is proving uneven. Some companies are further along the path; others are still working through the fundamentals. And perhaps that’s only to be expected, given the scale and complexity of the task at hand.