EUDR for Retail & Trade

What is EUDR?

The EU Deforestation Regulation (EUDR), formally known as Regulation (EU) 2023/1115, is a European Union law that came into force in June 2023 and requires companies placing specific commodities and derived products on the EU market to ensure those goods have not contributed to deforestation or forest degradation. The regulation covers seven key commodity groups: cattle, cocoa, coffee, palm oil, soya, wood, and rubber, along with a wide range of derived products such as leather, chocolate, furniture, and paper. Its core objective is to reduce the EU's contribution to global deforestation by making supply chain due diligence a legal obligation rather than a voluntary commitment.

EUDR and the Retail & Trade Industry

The retail and trade sector sits at the end of complex, multi-tier supply chains that often originate in regions with high deforestation risk, including parts of South America, Southeast Asia, and Central Africa. Because retailers and traders are the final point of sale before goods reach consumers, EUDR directly applies to any company importing or selling regulated products within the EU market — regardless of whether the company manufactures those products itself.

For grocery retailers, this means that every bar of chocolate, bag of coffee beans, or bottle of palm oil-based condiment on the shelf must be traceable back to land that was not deforested after December 31, 2020. For clothing and footwear retailers, leather goods and rubber-soled shoes fall under the same scrutiny. Home goods and furniture retailers must verify the origin of wooden components in every product they sell. Trade companies importing soy-based animal feed, palm oil derivatives used in cosmetics, or rubber components for industrial products face equivalent requirements.

A practical example: a large supermarket chain sourcing cocoa-based confectionery from a third-party manufacturer in Germany must obtain geolocation data showing the exact plots of land where the cocoa was grown and confirm those plots were not subject to deforestation after the December 2020 cutoff date. Another example is a fashion retailer importing leather handbags from Brazil — the company must perform due diligence on cattle farms in the supply chain and provide a due diligence statement before placing those goods on the EU market.

Failure to comply can result in fines of at least 4% of the total annual EU-wide turnover of the non-compliant operator, confiscation of goods, and temporary exclusion from public procurement procedures — consequences that make EUDR one of the most commercially significant environmental regulations the retail sector has faced in recent years.

Key Requirements

• Due diligence system: Retailers and traders must establish, implement, and maintain a documented due diligence system that covers information collection, risk assessment, and risk mitigation measures for every regulated commodity and product.
• Geolocation data collection: Companies must collect and store geographic coordinates (latitude and longitude, or polygon data) for the plots of land where regulated commodities were produced. For cattle, this means the farm level; for cocoa or coffee, the individual plantation or farm plot.
• No-deforestation verification: All sourced commodities must be verified as produced on land that was not subject to deforestation or forest degradation after December 31, 2020. This verification must be supported by evidence, not simply supplier declarations.
• Legality compliance: Products must have been produced in accordance with the relevant legislation of the country of production, including land use rights, environmental regulations, labor rights, and human rights protections.
• Due diligence statements: Before placing regulated products on the EU market or exporting them, operators must submit a due diligence statement through the EU's information system, confirming that due diligence has been carried out and no or negligible risk of non-compliance was found.
• Risk assessment and classification: Operators must assess the risk level associated with each product and supply chain using factors such as the country of origin's deforestation risk classification (standard, low, or high risk), the complexity of the supply chain, and the prevalence of illegal land use in the sourcing region.
• Risk mitigation measures: Where risk assessment identifies non-negligible risk, companies must take active mitigation measures before proceeding — such as requesting additional information from suppliers, conducting independent audits, or switching to certified sources.
• Supplier engagement and contractual clauses: Retailers must include EUDR compliance obligations in supplier contracts and actively communicate requirements throughout their supply chain, including at the raw material production level.
• Record keeping: All due diligence documentation, including geolocation data, risk assessments, mitigation actions, and due diligence statements, must be retained for a minimum of five years and made available to competent authorities upon request.
• Annual reporting: Large operators are required to report annually on their due diligence systems and the measures taken to prevent non-compliance.

Implementation Steps for Retail & Trade Companies

1. Map your product portfolio against regulated commodities: Conduct a full audit of your product range to identify every SKU that contains or is derived from cattle, cocoa, coffee, palm oil, soya, wood, or rubber. This includes finished goods as well as packaging materials, ingredients, and components. Use product specifications, ingredient declarations, and supplier data sheets as primary sources.
2. Assess your position in the supply chain: Determine whether your company qualifies as an "operator" (placing goods on the EU market for the first time or exporting them) or a "trader" (making products available on the market further down the chain). The obligations differ — operators bear the full due diligence burden, while traders have lighter obligations but must still verify that due diligence has been performed by the operator in the chain.
3. Engage your supplier base immediately: Send formal requests to all direct suppliers asking for EUDR compliance documentation, including geolocation data for production plots, country of production details, and confirmation of legal compliance. Set clear contractual deadlines and include EUDR compliance clauses in all new and renewed supplier agreements.
4. Build or procure a data management infrastructure: Implement a system capable of collecting, storing, and processing geolocation data, risk scores, and due diligence documentation at scale. For large retailers with thousands of SKUs, purpose-built supply chain traceability software or integration with existing ERP platforms is typically necessary. Spreadsheet-based approaches are unlikely to be sustainable at volume.
5. Conduct country-level risk assessments: Using the European Commission's benchmarking system (once fully published), classify each sourcing country as standard, low, or high risk. Prioritize deep-dive due diligence for high-risk countries — particularly for cocoa from West Africa, palm oil and rubber from Southeast Asia, and cattle or soya from South America.
6. Develop internal due diligence procedures and assign ownership: Create written procedures covering how due diligence is performed, who is responsible, how often it is reviewed, and how exceptions are escalated. Assign clear accountability to a named function — typically sustainability, procurement, or compliance — and ensure that function has the resources and authority to act.
7. Train procurement and sourcing teams: Ensure that buyers and category managers understand EUDR requirements and can identify compliance risks during supplier selection and contract negotiation. Procurement decisions should include EUDR compliance status as a standard evaluation criterion alongside price, quality, and delivery performance.
8. Register with the EU EUDR information system and submit due diligence statements: Once the EU's digital platform is operational, register your company and begin submitting due diligence statements for all regulated products before they enter the EU market. Test the process with a pilot product category before rolling out across the full portfolio.
9. Establish a continuous monitoring and review cycle: EUDR compliance is not a one-time exercise. Implement a regular review cycle — at minimum annually, or more frequently for high-risk supply chains — to update risk assessments, re-verify geolocation data, and confirm that supplier practices have not changed. Build non-conformance procedures that define what happens when a supplier fails to provide adequate documentation.

Frequently Asked Questions

Does EUDR apply to small retailers and importers, not just large corporations?
Yes, EUDR applies to all operators and traders placing regulated products on the EU market, regardless of company size. However, the regulation does introduce lighter obligations for small and medium-sized enterprises classified as "traders" — they must verify that a due diligence statement has been submitted by the operator upstream in the supply chain, rather than conducting full due diligence themselves. That said, even small retailers should act promptly, because the risk of receiving non-compliant goods from suppliers who are themselves unprepared is real and can result in the withdrawal of products from sale.

What counts as "deforestation" under EUDR, and how is the December 2020 cutoff applied?
EUDR defines deforestation as the conversion of forest to agricultural use, whether human-induced or not. The December 31, 2020 cutoff means that any land used to produce a regulated commodity must demonstrably have been forest-free before or on that date. Retailers need geolocation-linked satellite imagery analysis or certified verification by an accredited third party to confirm this. Supplier declarations alone are generally not sufficient for high-risk sourcing regions.

What happens if a retailer's supplier cannot provide the required geolocation data?
If a supplier is unable or unwilling to provide the necessary documentation, the retailer faces a stark choice: either treat that supply chain as high risk and implement additional mitigation measures (which may be impractical), or discontinue sourcing from that supplier. Continuing to place products on the EU market without adequate documentation constitutes a violation of the regulation. In practice, this is one of the most pressing supply chain challenges for retailers sourcing from regions with fragmented smallholder farming structures, such as cocoa in Ghana or Ivory Coast.

When do EUDR obligations come into force for retailers?
The application date for large operators and traders was originally set for December 30, 2024, but was delayed to December 30, 2025 following a European Commission proposal adopted in late 2024. Micro and small enterprises have an extended deadline of June 30, 2026. Regardless of these deadlines, companies should treat the implementation period as already active — building compliant due diligence systems takes significant time, and supply chain data collection in particular requires early engagement with tier-one and tier-two suppliers.

Summary

EUDR represents a structural shift in how the retail and trade industry must manage its supply chains — moving from voluntary sustainability commitments to legally enforceable traceability and due diligence obligations backed by meaningful financial penalties. Retailers that act now, invest in supplier engagement, and build robust data infrastructure will not only meet their legal obligations but will also be better positioned to meet the growing expectations of consumers, investors, and procurement partners who demand verifiable environmental accountability. The time to begin is not when the deadline arrives, but now, while there is still space to build compliance without operational disruption.