Why the extension?
The reason for the extension is straightforward: if the EUDR had come into effect in January 2025, most companies and their suppliers would have been non-compliant, and they still have a long way to go to meet the requirements.
Many companies are simply unprepared. Part of the problem stems from the absence of key guidance from the authorities, but the bigger issue is that businesses still don’t have a deep enough understanding of their supply chains to properly assess and mitigate deforestation risks. They lack the necessary documentation from suppliers to submit to regulators, and in many cases, they aren’t even aware of which suppliers pose the highest compliance risks. This puts them at risk of being excluded from the EU market, as EUDR is the most stringent deforestation regulation to date. Companies that don’t act quickly run the risk of not being ready, even with the 12-month extension.
The EU stresses that companies must “establish and keep up to date a framework of procedures and measures – a due diligence system.” This involves collecting relevant data, analyzing it, and implementing risk mitigation measures when necessary. The process of data collection, risk assessment, and mitigation should be directly connected to the company’s business activities and its supply chains.
While companies have been racing to set up systems for submitting due diligence statements, many have overlooked the critical task of fully understanding their suppliers’ sourcing practices and mitigating risk when it arises. The latest guidance provides much clearer instructions on how companies can achieve this.
In response to the complex nature of global supply chains, the EU is urging companies to improve transparency by mapping their entire supply chain. If there are missing details or unknown parts in the supply chain, it is seen as a high-risk situation.
Additionally, the EU places strong emphasis on having well-documented systems to demonstrate accountability. The guidance states: “If all relevant documents are ready and available upon operators’ request, then it is more likely that the supply chain is well established, and the supplier is aware of the EUDR requirements.”
For the first time, the guidelines also suggest ongoing monitoring of suppliers for violations. This includes checking for “substantiated concerns” related to suppliers, as well as assessing factors such as corruption levels and business risk indices in the supplier’s country.
The new guidance gives companies a much clearer path to follow but also highlights the significant information challenges ahead. For example, it clarifies that the “production date” refers to the harvest date, except in the case of cattle products, where it starts on the date of birth.
In short, companies now face more detailed requirements than ever before. The data collection, risk analysis, and mitigation must be connected to their specific business operations and supply chains. Although the extension allows more time, the road to compliance is longer than many anticipated. The need for robust technology and proven processes is now undeniable.
The recent guidance from regulators has given companies the clarity they need to take actionable steps towards compliance. Sphera’s Supply Chain Sustainability platform (formerly SupplyShift) has been at the forefront of helping businesses assess deforestation risks, monitor their progress towards Zero Deforestation goals, and comply with regulations like the EU Timber Regulation (EUTR) for more than a decade.
This expertise is now fully integrated into Sphera’s EUDR solution, part of the industry-leading Supply Chain Transparency platform. With Sphera, companies gain access to automated end-to-end solutions for EUDR due diligence statements, supplier deforestation risk assessments and comprehensive commodity mapping tools. Additionally, our platform is backed by expert consultative support, ensuring companies have the resources they need to navigate compliance and achieve sustainability.
The recent clarifications from the EU on the Deforestation Regulation offer vital support for businesses facing compliance challenges. With extended deadlines and clearer guidelines, companies can enhance their understanding of supply chains and establish effective due diligence systems. Leveraging advanced solutions like Sphera’s Supply Chain Sustainability platform will be essential for navigating the complexities of compliance. By taking proactive steps now, organizations can meet regulatory requirements and contribute to a more sustainable future.
