From small coffee shops to supermarket giants, and artisan garment makers to big brand fashion names – tens of thousands of companies will be affected by the EU Deforestation Regulation. Understanding its implications is essential for businesses worldwide. 

The EU Deforestation Regulation will start to apply to businesses around the world at the end of this year, yet many businesses don’t realise the scale of its impact. By imposing stringent rules around the import and export of products linked to deforestation into and from the EU, it is hoped that it will significantly reduce global deforestation leading to the loss of habitat and biodiversity, reduce greenhouse gas emissions, and protect the rights Indigenous peoples.  

The EUDR targets seven key commodities: cattle, cocoa, coffee, oil palm, rubber, soya, and wood. These commodities are significant drivers of deforestation, with EU consumption playing a major role. Between 1990 and 2008, the EU accounted for one-third of global deforestation-related imports.  

The use of these materials is widespread and affects a diverse range of industries, from construction to cosmetics, cafes and restaurants to automotive manufacturers. The impact extends to supermarkets, luxury goods, fashion, chemical companies, pharmaceuticals, and furniture manufacturers and retailers. FMCG (Fast-Moving Consumer Goods) retailers and manufacturers, food and drink manufacturers, food retailers, and the investment and finance sector are also affected. 

TDi Sustainability is a global sustainability consultancy whose responsible sourcing consultants can help you understand the impact of the EUDR on your business. TDi recently hosted a panel of experts to discuss the impact of the regulation, featuring James Hollins, Head of Data and Due Diligence, Zandi Moyo, Senior ESG Analyst, and Sunil Abeyasekera, ESG Consultant. The webinar, which can be viewed here provided critical insights into the EUDR’s scope, requirements, and implications for global supply chains. 

The panel highlighted the complex interconnections between deforestation and other environmental and social issues – emphasising the need for companies to address a wide range of challenges in their supply chains. “While deforestation and forest degradation are the key ESG risks addressed by the EUDR, it is important to pay attention to other ESG issues associated with deforestation as well,” Zandi Moyo says. “And that’s because deforestation can have far reaching impacts on the environment and people destroying ecosystems that are vital to wildlife and livelihoods, with linkages to biodiversity loss, degradation of ecosystems, climate change and disruption to local and indigenous communities, and some of these ESG issues can also be used as indicators of deforestation, such as biodiversity loss.”

James Hollins stressed the requirements under the Regulation for extensive data collection to ensure products are deforestation-free and compliant with local laws. “This includes precise geolocation data” explains James, “and there are specific requirements for companies of different sizes – demonstrating the regulation’s commitment to traceability and accountability.” 

Overall, the panel advocated for a landscape-scale approach to reducing deforestation, outlining strategies that companies can take to go beyond the basic requirements for compliance with the regulation and take a holistic approach. Sunil Abeyasekera explains “This approach encourages collaboration with stakeholders to tackle the root causes of deforestation and implement comprehensive interventions, offering a broader perspective on deforestation drivers and solutions.”  

As the EUDR’s implementation approaches, businesses must act proactively to meet its stringent requirements. This involves investing in robust data management systems, conducting thorough risk assessments, and fostering transparent supplier relationships. Therefore, the TDi team advocated for a strategic, holistic approach to EUDR compliance, recommending risk prioritisation using a double materiality approach and detailed sub-national assessments.  

TDi Sustainability’s insights can offer businesses a deeper insight into navigating the EUDR’s complexities. As compliance deadlines near, companies are urged to leverage these insights to develop effective strategies, contributing to global efforts to combat deforestation. For more information on the EU Deforestation Regulation and its business implications, contact TDi Sustainability.

For more information about the EU Deforestation Regulation, download the EUDR Guidebook.