7 key ways the EUDR will impact supply chains

The European Union Deforestation Regulation (EUDR) is one of the most significant regulatory changes affecting global supply chains in recent years. While its start date has already been pushed back once, when it does finally take effect at the end of 2025, it will significantly reshape how companies source and track their products.

The regulation is applicable to seven different commodities – palm oil, soy, cattle, wood, cocoa, coffee and rubber – and their derived products, all of which have a significant impact on global deforestation.

Here are seven key ways the EUDR is likely to impact global supply chains.

1. Data collection and transfer challenges

The EUDR’s requirement for detailed data collection, particularly geolocation information, will fundamentally transform supply chain documentation. Companies face the daunting task of gathering precise location data from potentially thousands of farmers and suppliers, especially those at the very beginning of the supply chain. For highly processed products, the challenge is even greater as companies must track commodities through multiple tiers of suppliers while maintaining accurate documentation throughout the entire chain.

2. Acceleration of supply chain digitalisation

Paper-based documentation systems will become largely obsolete under the EUDR. The sheer volume and complexity of required data (geolocation coordinates, legality evidence, etc.) makes paper-based systems impractical for all but the smallest supply chains (fewer than around 10 suppliers). This is driving rapid digitalisation across supply chains, with companies pursuing three main approaches:

• Development of proprietary traceability platforms:

Larger companies are investing in their own traceability systems, where everyone in their supply chain can input data directly into the platform.

• Adoption of third-party digital tracking systems:

Some companies are opting to use third-party traceability platforms, like the one Peterson Technologies is developing. This makes particular sense for companies that want a ready-made solution or work with suppliers already using these platforms.

• Integration with certification bodies’ digital platforms:

Organisations like FSC and PEFC are building or partnering on digital platforms that offer standardised ways to gather, manage and verify compliance data.

3. Shifting supplier relationships

The EUDR is likely to reshape how companies interact with their suppliers in two distinct ways. Some businesses will forge deeper, more transparent relationships with existing suppliers, supporting them with training and resources to adapt. Others may  switch to alternative suppliers who already have robust compliance processes in place, especially in countries with established traceability standards. For example, cocoa buyers might shift from suppliers in Côte d’Ivoire to Ghana, where traceability systems are more developed.

4. Rise in the importance of certification

While certification alone won’t tick all the EUDR boxes, schemes like FSC and PEFC are becoming valuable allies in the compliance journey. These organisations are developing specialised tools and platforms to help companies meet EUDR requirements more efficiently. Certification offers a particular advantage for suppliers concerned about data privacy, as it allows them to share verified compliance through third-party audits rather than revealing all underlying data to potential buyers.

5. Market structure evolution

The regulation is likely to drive structural changes in how supply chains operate. The emphasis on traceability may lead to:

• Reduced spot buying and increased long-term supplier partnerships
• Potential shift away from smallholder farmers toward larger, more easily traceable suppliers
• Price increases to accommodate compliance investments
• Some suppliers potentially redirecting sales to markets with less stringent requirements

6. Geographic sourcing shifts

Countries with established traceability systems and stronger regulatory frameworks may gain competitive advantages. For instance, Indonesia and Malaysia’s more advanced palm oil traceability systems could make them preferred sourcing destinations. This could create challenges for countries with less developed systems, potentially leading to market access difficulties for their producers.

7. Greater technology integration

Companies will need to integrate multiple tech solutions to make sure they are able to comply with the EUDR. On top of traceability systems, this is likely to include tools like satellite monitoring technology for verifying deforestation-free claims and monitoring land use, and systems for compliance reporting. This isn’t just about buying new software – it’s about fundamentally changing how companies monitor and verify their supply chains through technology.

No time to waste

Despite the delayed start to EUDR implementation, companies should use the additional time wisely to progress their own compliance journeys. It will require significant, effort, investment and resources, but the changes should ultimately lead to more resilient and transparent supply chains, delivering better outcomes for businesses, consumers and the environment.