EU Regulation 2023/1115 against deforestation introduces new traceability requirements that reshape industrial supply chains. Packaging, food, and automotive are among the most affected sectors

by Marco Arezio

The fight against deforestation has been a central issue of international debate for decades, but has rarely been translated into legal instruments as binding and far-reaching as the EUDR (European Union Deforestation Regulation).

With Regulation (EU) 2023/1115, the European Union has decided to raise the bar, setting a clear boundary: from 30 December 2024, for the majority of companies, and from 30 June 2025 for micro and small businesses, it will be prohibited to place on the EU market products derived from deforestation or forest degradation that occurred after 31 December 2020.

This is not an abstract principle, but a radical shift for sectors that for decades have relied on part of their supplies to source raw materials from high-risk areas. For the first time, access to the European single market will depend not only on price and quality parameters, but also on documented and geolocalized verification of environmental impact.

Beyond primary production: who is involved

The EUDR is not limited to agricultural and forestry producers. Operators and traders along the entire value chain are affected. Operators—those placing a regulated product on the European market for the first time—are required to conduct comprehensive due diligence, including information gathering, risk assessment, and mitigation measures. Traders, even small ones, must still ensure product traceability and maintain documentation.

This means that not only the cocoa farmer or timber producer, but also the importer, distributor, or brand selling a finished product —such as a package of chocolate biscuits or a piece of wooden furniture—will be responsible for compliance.

The due diligence declaration, which must accompany every regulated product, therefore represents the operational heart of the new system: without it, no goods will be able to circulate on the European market.

Investments and costs: the burden of compliance

The European Commission has estimated that compliance costs for businesses could reach €2.6 billion. This figure, when compared to the overall market value, appears sustainable, but should not be underestimated.

The main items of expenditure concern:

- the development of digital traceability platforms capable of managing complex data

- the implementation of geolocalization systems for production areas, an explicit requirement of the regulation

- internal and external audits to verify compliance

- training of personnel dedicated to compliance management

- the purchase of recognized environmental certifications

For large companies, these costs represent an onerous but manageable adjustment. For SMEs, however, the proportional burden is likely to be greater, especially in the absence of economies of scale. Many of them will have to rely on consortia, partnerships, or shared digital solutions to reduce the financial impact.

Packaging: a transformation laboratory

The packaging sector is one of the most affected by the EUDR, as it uses significant amounts of paper, cardboard, and wood derivatives . Each fiber must be traced back to its source, ensuring it does not come from areas deforested after 2020.

This regulatory pressure adds to existing trends: growing demand for recyclable packaging, reduced consumption of virgin plastic, and increased use of biopolymers and compostable materials. The EUDR accelerates this trend, pushing companies to focus on certified solutions (FSC, PEFC) or materials from post-consumer recycling.

Many operators are investing in systems that allow them to explain and demonstrate fiber traceability to the end consumer, transforming compliance into a marketing and differentiation tool.

Parallel supply chains: from food to mobility

The EUDR's impact isn't limited to packaging. The affected supply chains cover some of the most important markets for the European economy:

- Food: Cocoa, coffee, soy, and palm oil are the cornerstones of agri-food trade. The challenge is to certify not only the raw materials, but also the processed products (chocolate, biscuits, vegetable oils, soy derivatives).

- Fashion and leather goods: Leather, derived from livestock, is a regulated product. This applies to both large brands and small artisans.

- Automotive: Natural rubber for tires and components is a strategic material. Automakers will have to rethink part of their supply chain.

- Furnishings and construction: furniture, panels, structures and wood finishes are under the same lens.

In all these sectors, the ability to guarantee traceability becomes a prerequisite for market access, no longer an added value.

Global consequences: new business geometries

The EUDR is not just a European legislative act: it is a measure that restructures global trade relations. The EU, thanks to its purchasing power, is imposing a new international environmental standard.

Large agricultural and forestry operators have the resources to adopt advanced traceability systems, but millions of small producers in tropical countries risk being left out because they operate in environments characterized by poor digitalization, limited infrastructure, and a lack of institutional support.

This scenario could generate a dual consequence: on the one hand, the consolidation of large global players; on the other, the marginalization of small farmers, with disruptive social and economic effects.

The geopolitical dimension should not be underestimated: some countries could react by shifting trade flows to less regulated markets, such as China, India, or Russia, creating parallel supply chains. Others, however, could adapt rapidly, turning sustainability into a competitive asset to gain privileged positions in exports to Europe.

In the long term, it's likely that other economic blocs—the United States, Canada, and the United Kingdom—will decide to follow Europe's lead, just as they did with the GDPR on data protection. In that case, the EUDR would become the global benchmark for agro-forestry trade rules, pushing the governments of producing countries to adopt stricter forest protection regulations.

The EUDR is therefore an instrument of environmental diplomacy: a trade regulation that, in addition to protecting forests, helps redefine geopolitical balances.

An investment in resilience

If viewed solely as an expense, the estimated €2.6 billion represents a considerable burden. But from a broader perspective, these investments can make supply chains more transparent, resilient, and less exposed to reputational risks.

In a market increasingly focused on ESG criteria, transparency about the origin of raw materials becomes a competitive advantage. Companies that successfully adapt will not only be compliant, but will also be able to position themselves as leaders in a new industrial paradigm, where sustainability and innovation are intertwined.

Operational Focus: How a Company Can Prepare for the EUDR

Complying with the EUDR isn't just about completing compliance documents. For packaging companies, as well as those in the food, fashion, and automotive sectors, it's essential to integrate compliance into their corporate strategy. Some operational steps are crucial:

- Supply chain mapping: identify each supplier, both direct and indirect, collecting detailed information on their origins and production processes.

- Digital traceability: adopt advanced supply chain management systems, including blockchain, to ensure geolocation and data transparency.

- Structured due diligence: establish an easily accessible digital archive, with verifiable reports and internal control procedures.

- Recognized certifications: use FSC, PEFC, Rainforest Alliance and other schemes as tools for simplification and risk reduction.

- Internal training: raise awareness and align all company functions – purchasing, quality, legal, sustainability – through ongoing refresher programs.

- Management of at-risk suppliers: monitor the most sensitive markets, activate continuous controls and review supply agreements where necessary.

- Proactive communication: transform traceability and sustainability efforts into a differentiator for customers, partners, and end consumers.

Some packaging companies are already experimenting with blockchain-based pilot projects that allow for real-time verification of the origin of wood fibers or paper used. Others have partnered with technology startups to integrate satellite geolocation systems. These examples demonstrate that compliance can go hand in hand with innovation, opening up new market opportunities.

Beyond the obligation, the perspective

The EUDR is not just a regulatory constraint, but a framework for industrial transformation. Sustainability is no longer an afterthought: it is a prerequisite for market access.

Those who invest today in traceability systems, digitalization, and responsible partnerships will be able to find themselves not only compliant tomorrow, but also leading in a market that rewards transparency, resilience, and responsibility.

© Reproduction Prohibited