TLDR: The EU's 12-month delay of EUDR offers the opportunity for companies to tackle key business challenges ahead of what will no doubt be much stricter enforcement.

Based on our review of the latest guidance from the EU and the results of tests Sourcemap conducted with the EU's Deforestation Due Diligence Registry, we expect that enforcement will be stricter than originally expected. Companies need to quickly check their suppliers' readiness across multiple dimensions in time for the new EUDR implementation deadline of December 31, 2025.

1. Shipments will be blocked from entry into the EU

The EU will now require a DDR at the point of entry, directly as part of customs declaration prior to shipments entering the EU. (The DDR or Due Diligence Reference Number can only be obtained after submitting a map of every plot of land used to produce a shipment, and ensuring they're all deforestation-free). Non-EUDR-compliant shipments won't be allowed entry into the EU - a major problem not only for importers, but for everyone else downstream. Retailers, Brands, Manufacturers and Importers all need to screen the maps that are being provided to avoid any surprise delays ahead of 2026.

2. The EU portal will automatically screen data prior to issuing a DDR

Based on early testing of the EU portal, geo-data is being evaluated automatically once it's uploaded. Even simple mistakes like duplicate maps are being flagged and blocking the submission of a DDS for an entire shipment. Suppliers will need to carefully pre-screen their data prior to 2026 to ensure that the EU's own screening doesn't block a shipment upon upload. 

3. Chain of custody traceability will be required

While the EU won't require chain of custody information (i.e. information on the intermediaries in the supply chain) in order to accept a DDS, the practice will be considered standard by 2026 as it's already required by the US, Canada Forced Labor Bans and CSDDD. That means importers subject to EUDR will need to map their entire supply chains and collect documents proving that the products which they receive actually came from the farms and forests they map.

4. A robust legality framework must include mitigations and audit process

Now that companies have more than one year left to prepare for the EUDR, they have the time to ensure that all suppliers meet legality requirements - or if they don't, that they put plans in place to be legally compliant by 2026. The 15 month preparation period means there is ample time to collect legality evidence from suppliers, validate it using audit-based approaches (AI is not sufficient to meet the burden of proof for compliance), and put corrective actions in place with enough time to observe improvements and resume trade with non-compliant suppliers.

What companies can do to prepare for EUDR:

The EUDR remains the most stringent supply chain due diligence law on the books. Our recommended preparation includes:

N-tier Mapping

Companies will need to ensure that they have visibility over the entire supply chain for EUDR products, including intermediaries, to ensure that the product they map are not blended with anything along the way. Sourcemap offers the only automated cascading n-tier mapping solution on the market with record response rates and most supply chains mapped to raw materials within 60 days.

Chain of Custody Traceability

Once mapped, suppliers must provide documentation to verify the integrity of the supply chain, from raw material to import. This is also in line with the importer guidance issued by US Customs and Border Protection in 2021, so it helps multinationals stay ahead of regulatory requirements on both sides of the Atlantic.

Supplier participation 

The biggest challenge to EUDR implementation is collecting geo-data from suppliers: the GPS points and polygons that locate every farm and forest involved in the raw material production. You will need to develop a supplier outreach strategy complete with announcements, training, technical support, and escalation plans in case of issues with responsiveness and data. Part of Sourcemap's offering is live, white-glove supplier support in local languages to help suppliers with data issues, as well as support for open-source tools to install and map farms plots on their own.

Accuracy of geo-data

While companies have been mapping farms and forests for over a decade, the quality and completeness of mapping data varies widely. Each shipment under EUDR could originate from thousands of plots of land, each of which will need to be analyzed for deforestation. More than 30% of the 5 million polygons Sourcemap has collected so far - from some of the world’s most mature supply chains - have failed validation the first time suppliers submitted them. An automated validation software like Sourcemap's is essential to provide suppliers with the feedback they need to ensure they are able to submit accurate and complete data for EUDR deforestation analyses.

Mitigation

Once suppliers have provided accurate and complete geo-data, deforestation risk assessment can begin. With hundreds of thousands of plots of land to analyze, the most robust approaches combine satellite imagery, government data, and a whitelist of previously verified agricultural and logging lands. Nevertheless, some plots will trigger a deforestation alert and need to be mitigated, either by collecting corroborating evidence or by electing to source elsewhere. The delay in EUDR means companies have more time to pre-screen supplier sourcing maps and put these mitigation plans in place.

Integration

The EUDR calls for a deforestation-free sourcing map to be submitted with every import shipment, sometimes thousands of times per year. Despite the delay, the EU is going ahead with the launch of the EU Deforestation Due Diligence Registry, an automated platform to collect the attestations that include these maps (so-called Due Diligence Statements). The EU platform will launch as planned in November 2024, which means that integration teams will have more time to test the interface between ERP, supply chain regulatory solutions like Sourcemap, supplier systems, and the EU.

Legality

The EUDR expands company due diligence to a series of new risk categories that many companies may not include in their due diligence processes. This delay buys time for companies to make the necessary updates to their codes of conduct and to work with their auditors to assess the readiness of suppliers to comply with new risk categories - especially those involving land rights, protection of indigenous rights, and traceability approaches. In the event the policies are missing or the data to back them up is found to be insufficient in an audit, suppliers have ample time to put corrective measures in place for EUDR compliance.

Need to know more? Sourcemap offers turnkey EUDR readiness packages that can be installed in as little as 1 week. Contact us at info@sourcemap.com