Companies may benefit from getting ahead on compliance with EUDR
As the European Union Deforestation Regulation (EUDR) edges closer to full implementation [i], businesses are recognising that it represents more than just a compliance obligation; it’s a strategic opportunity. In recent conversations hosted by Innovation Forum, Deloitte’s sustainability leaders John O’Brien and Evan Harvey outlined how companies can shift perspective from viewing the regulation as merely a compliance checkbox to seeing EUDR as a catalyst for strategic transformation.
State of play
Companies can take informed steps toward EUDR compliance with access to available resources:
Immediate action required: Enforcement begins on December 30, 2025, for large companies, with smaller entities following by June 30, 2026. [ii]
Support ecosystem emerging: Despite the complexity, tools, guidance, and partnerships are available to companies, allowing them to achieve compliance efficiently.
Specialised guidance can be of great help: The availability of specialised support can help organisations navigate compliance complexities without becoming overwhelmed.
Companies feeling daunted by EUDR requirements should be aware that support systems exist to accelerate their compliance.
Readiness, transparency, and traceability
In our view, current readiness levels across industries reveal differences in preparedness, largely reflecting each sector's history and experience with supply chain transparency requirements. The maturity gap between leading and lagging sectors creates both challenges and opportunities for knowledge transfer and leading practice sharing.
Advanced sectors: Food and agriculture companies demonstrate the highest readiness due to mature traceability systems developed through years of public pressure and voluntary commitments.[iii]
Emerging sectors: Manufacturing, automotive, retail, and pharmaceuticals are beginning to take action but face challenges from complex supply chains and limited data availability.[iv]
Early-stage sectors: Technology, media, telecom, life sciences, and health care companies find themselves earlier in their compliance journey with less mature traceability systems.
Size and complexity factors: Smaller companies with complex supply chains may face increased difficulties due to limited resources, while organisations with thousands of suppliers encounter different complexities than those with streamlined procurement.
Closing data gaps
Several gaps may hinder effective traceability and nature impact assessments across sectors. Addressing these data and transparency challenges is integral for successful EUDR implementation. These gaps include:
Location-specific data deficiencies: Missing or unreliable geospatial data, including precise farm and plot coordinates.
Supply chain transparency limitations: Difficulty tracing high-risk commodities (such as palm oil, cattle, soy, rubber, and leather) back to their forest origins, especially through multi-tiered supply chains.
Supplier integration shortfalls: Lack of tools, incentives, or capacity for many suppliers to share required data with procurers.
Multi-standard alignment needs: Requirement for in-scope companies to address gaps for EUDR while preparing for related frameworks like Taskforce on Nature-related Financial Disclosures (TNFD) and Science Based Targets Network (SBTN).
Technology integration challenges: Disparate data sources need to be connected across complex global supply networks
Early-adopter benefits
In our experiences, some companies investing early in EUDR compliance are discovering strategic benefits that extend far beyond regulatory adherence. These organisations may be able to position themselves advantageously, while some of their competitors remain focused solely on meeting minimum requirements.
Enhanced operational readiness: Better preparation and understanding of supply chain dependencies
Supply chain mastery: Advanced knowledge may provide proactive risk avoidance and opportunity identification
Brand differentiation: Early mover status may enhance reputation and attract sustainability-conscious customers
Performance optimisation: Early preparation may create cost savings and broader performance signals for better operational stewardship
Competitive positioning: Potential first-mover advantage in understanding and leveraging supply chain data for strategic decision-making
Non-compliance risks
The financial stakes of non-compliance create compelling urgency for near-term action. The costs of delay may far exceed the investments required for proactive compliance. Risks include, but are not limited to:
Severe regulatory penalties: Fines reaching up to 4% of annual EU turnover for non-compliance [v]
Market access restrictions: Potential inability to supply to or purchase from specific European markets[vi]
Operational disruption costs: Supply chain vulnerabilities may create significant resource and cost implications
Reputational damage: Consumer sentiment is increasingly linking environmental practices to brand value and purchase decisions
Technology: Enabling data-driven compliance
Technology serves as an accelerator for EUDR compliance, enabling companies to collect and integrate data across their complex value chain operations. The regulation's specific traceability requirements call for sophisticated digital solutions capable of handling modern global supply chain complexity:
Data integration capabilities: Collecting and processing information across upstream and downstream value chain operations
Traceability enablement: Supporting EUDR's specific deforestation-free requirements through advanced digital solutions
Geolocation analysis: Important tools for analysing farm locations, forest proximity, and compliance reporting requirements
Platform processing: Cloud-based traceability platforms and application programming interface (API) systems for managing data from multi-tiered supply chains
Scalability solutions: Technology systems that can grow and adapt as regulatory requirements evolve
However, technology implementation gives rise to systematic challenges that companies likely also need to address. Success requires both technological sophistication and broad change management approaches. These may include:
Data quality issues: Poor-quality supplier data remains a persistent hurdle requiring systematic improvement
Integration complexity: Connecting disparate data sources calls for sophisticated technological solutions
Supplier collaboration needs: Enhanced partnerships may need to be adopted to improve data sharing and quality
Investment requirements: Upfront costs for technology infrastructure and ongoing maintenance
Evolving risks into strategic opportunities
EUDR compliance aims to address a fundamental visibility challenge while creating opportunities for broader strategic value creation. Leading companies view this regulation as a platform for developing broad nature and forest strategies that extend well beyond minimum compliance requirements.
Strategic visibility enhancement: Better understanding of suppliers can enable improved supply chain resilience and risk management
Reputation risk management: Companies with high-risk geographies can proactively address consumer trust concerns
Data-driven insights: New data types enable sophisticated analysis of supply chain risks and opportunities
Market differentiation: Enhanced data allows for the creation of premium products with higher environmental specifications
Process alignment: Opportunity to coordinate data processes across multiple sustainability regulations for consistency
Responding to the regulation may generate significant intelligence about supply chain operations and nature dependencies. Companies leveraging these insights to transform their understanding of business resilience and value creation opportunities may be able to achieve many benefits, including:
Enhanced supply chain intelligence: Geolocation mapping and detailed tier analysis provide greater risk understanding
Resilience building: Data enables proactive monitoring and verification of supply chain stability
Financial risk mitigation: Early identification of ecosystem degradation risks before they impact operations
Premium market access: Verified sustainability credentials may enable access to higher-value market segments
Strategic integration: EUDR insights inform broader business strategy and long-term planning
Being future-ready
Future regulatory expansion is likely as financial risks from nature degradation become clearer to markets and regulators.[vii] Companies developing a detailed understanding of their nature dependencies may be better positioned for evolving requirements:
Regulatory anticipation: Nature-related regulation is likely to expand in coverage and sophistication over time
Proactive positioning: Companies understanding their nature reliance may gain advantages for future compliance
Material risk focus: Organisations should address nature-related risks regardless of current regulatory requirements
Strategic foundation: Compliance provides a starting point for broad ecosystem value understanding
Strategic actions by EUDR compliance stage
Different stages of EUDR readiness require distinct approaches and priorities. Companies should analyse their current position honestly and focus resources on the most impactful next steps for their situation. Companies just starting can benefit from specialised guidance and rapid assessment of their exposure to covered commodities. The approaching deadlines create a pressing need for foundational work.
Seek professional guidance: Engage specialised professionals to understand specific exposure and required actions quickly.
Assess compliance timeline: Determine which deadline applies and develop an appropriate preparation schedule.
Map initial exposure: Identify where supply chains intersect with the seven covered commodity types.
Prioritise high-risk areas: Focus initial efforts on supply chain segments with the greatest compliance risk.
Companies working through the process can benefit from prioritising building reliable, repeatable systems that can scale beyond initial compliance requirements. Technology selection and supplier engagement become critical success factors:
Focus on data reliability: Invest in systematic data collection with emphasis on accuracy and verification.
Build scalable capabilities: Develop processes that can repeat annually and adapt to changing requirements.
Technology evaluation: Select and implement solutions that support long-term compliance and strategic needs.
Supplier engagement: Invest in education and relationship development with key supply chain partners.
Companies nearing compliance have an opportunity to transform their compliance investments into sustainable competitive advantages. The focus shifts from meeting requirements to leveraging capabilities for strategic value creation, including:
Competitive advantage development: Use compliance data and systems for broader strategic business value
Strategic integration: Incorporate EUDR insights into a comprehensive business strategy and decision-making
Continuous improvement: Establish systems for ongoing capability enhancement beyond minimum compliance
On-going nature impacts
A message for companies impacted is to treat EUDR as the beginning of a journey toward a nature-positive business strategy rather than a one-time compliance exercise:
Journey mindset adoption: View EUDR as a starting point for ongoing strategic development
Strategic platform building: Use a compliance foundation for a broader nature-related business transformation
Continuous value creation: Move beyond checkbox compliance to embrace ongoing strategic advantage
Future readiness: Prepare for expanding nature-related regulatory requirements and market expectations
EUDR represents a pivotal moment for businesses to transform regulatory requirements into strategic competitive advantages. Companies that embrace this regulation as an opportunity to build supply chain resilience, understand nature dependencies, and create differentiated value propositions may emerge stronger and better positioned for future success.
The path forward calls for moving beyond a compliance mindset to strategic integration, using EUDR as a foundation for nature-related business strategy that drives both regulatory compliance and sustainable competitive advantage. Organisations that make this transition may find themselves not just meeting regulatory requirements, but using them to build more resilient, profitable, and future-ready businesses.
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