In an era where environmental sustainability has become a cornerstone of global policy, the European Union has taken a decisive step forward with implementing Regulation (EU) 2023/1115,¹  commonly known as the EU Deforestation Regulation (EUDR). This landmark legislation represents one of the most significant environmental compliance challenges businesses operating in the EU market have faced in recent years, with far-reaching implications for global supply chains across multiple industries.

The EUDR aims to minimize the European Union's contribution to global deforestation and forest degradation by ensuring that products placed on the EU market are not connected to recently deforested land. Originally scheduled to take effect starting December 30, 2024, the European Commission has recently extended the implementation timeline by 12 months. Large and medium-sized companies now have until December 30, 2025, to achieve compliance, while micro and small enterprises have been granted an additional extension to June 30, 2026.

The stakes for non-compliance are exceptionally high. Penalties are established by the member states, but companies found in serious violation of the EUDR can face severe penalties, including fines of up to 4% of their annual EU turnover. Beyond financial penalties, non-compliant businesses risk confiscation of products, gained revenue and exclusion from public procurement processes and future government tenders.

The EUDR covers seven primary commodities: cattle, cocoa, coffee, oil palm, rubber, soya, and wood. It also extends to a wide range of derived products, including meat products, leather, chocolate, coffee, palm nuts, palm oil derivatives, glycerol, natural rubber products, soybeans, soysoybeans, soybean flour and oil, fuel wood, wood products, pulp and paper and even printed books, kitchenware and furniture.

The regulation establishes three fundamental requirements for products to be placed on
the EU market:

1. Products must be “deforestation-free,” meaning they were not produced on land deforested after December 31, 2020.
2. Products must be produced in accordance with the relevant legislation of the country of production, including environmental protection, forest-related rules, land use rights and labor regulations.
3. Products must be covered by a due diligence statement indicating no more than a negligible risk of non-compliance.

Unlike previous EU environmental regulations that focused solely on illegal activities, the EUDR targets any legal or unlawful deforestation under local laws. This means that even if deforestation is permitted under a country's domestic legislation, products from that deforested land cannot be placed on the EU market if the deforestation occurred after the December 2020 cut-off date.

The regulation distinguishes between “operators” and “traders.” It places primary responsibility on "operators" — companies that place relevant products on the EU market or export them from the EU. These operators must conduct due diligence before placing products on the market, which includes collecting information, assessing risks and implementing mitigation measures where necessary. They must also submit due diligence statements through a dedicated EU Information System, receiving a reference number that becomes critical for subsequent market access.

"Traders" — those who make products available on the EU market after they have been placed there by operators — have different obligations depending on their size. Large traders must ensure that due diligence has been exercised upstream in the supply chain and submit their due diligence statements. Small and medium-sized enterprises (SMEs) have simplified obligations, primarily focusedfocusing on record-keeping and information sharing.

Overall, the EUDR establishes a robust framework compared to market-based solutions that promote a similar outcome; combatting deforestation. These are the trade-offs;

Geolocation Requirements: A Technical and Logistical Challenge

Perhaps the most technically demanding aspect of the EUDR is the requirement to collect and maintain precise geolocation data for every plot of land where regulated commodities are produced. The regulation establishes a clear distinction based on land size: plots larger than 4 hectares require polygon data (multiple coordinate points defining the perimeter). Plots under 4 hectares can be identified with a single coordinate point.

This seemingly straightforward requirement becomes extraordinarily complex when applied to real-world supply chains. Consider a chocolate manufacturer sourcing cocoa from thousands of smallholder farmers across West Africa, or a furniture producer using timber from multiple forest concessions across several countries. Each source must be individually geolocated, with the appropriate level of detail depending on the plot size. The technical expertise required to collect accurate polygon data is not commonly available in many agricultural communities, particularly in developing regions. GPS-enabled devices must be used to walk the perimeter of each plot, recording coordinate points with six decimal places of precision. For smallholders without access to appropriate technology or training, this represents a significant barrier to compliance.

Cross-Referencing with Satellite Imagery

Once geolocation data is collected, the EUDR requires cross-referencing this information with the EU's Copernicus satellite database to verify that the land was not subject to deforestation after December 31, 2020. This process demands specialized technical capabilities that most organizations do not currently possess in-house.

The verification process involves analyzing historical satellite imagery to determine land use changes over time – a task requiring expertise in remote sensing, geographic information systems (GIS) and environmental science. Organizations must develop or acquire systems capable of processing this data at scale, particularly when dealing with hundreds or thousands of individual plots across diverse geographical regions.

Supply Chain Complexity and Traceability

Modern supply chains are rarely linear. Commodities often pass through multiple intermediaries before reaching the final product stage, with mixing and aggregation occurring at various points along the way. The EUDR requires maintaining traceability throughout this entire process, with a clear chain of custody from the plot of land to the final product.

This presents particular challenges for bulk commodities such as soy, palm oil or cocoa. These products are typically aggregated from numerous sources during processing, making it difficult to maintain the connection between a specific batch of raw material and its original production location. The regulation explicitly prohibits mixing compliant and non-compliant commodities, requiring segregated supply chains that many industries are not currently equipped to provide.

The Cost of Getting It Wrong

The financial implications of non-compliance are severe, with potential fines reaching 4% of annual EU turnover. This could translate to penalties in the hundreds of millions or even billions of euros for large multinational corporations. Beyond direct financial penalties, non-compliant companies face exclusion from public procurement processes and potential restrictions on market access.

Perhaps most significantly, the reputational damage associated with being identified as a contributor to global deforestation can have lasting impacts on brand value and customer relationships. In an era of increasing environmental consciousness, such associations can undermine years of sustainability efforts and erode consumer trust.

The Benefit of Getting it Right

Managing risk is one way to look at compliance, but there are business incentives that make compliance appealing when companies get it right. Meeting EUDR requirements drives innovation in supply chain management, improving traceability, risk management and operational efficiency. Enhanced transparency reduces compliance risks and builds stronger relationships with suppliers and stakeholders. It aligns your business with global climate and biodiversity targets, future-proofs your operations and ensures readiness for evolving regulations. This positions your company as a responsible, innovative, forward-thinking partner and credible brand in the global marketplace

How Informatica Can Help: Enterprise Data Solutions for EUDR Compliance

The challenges posed by the EU Deforestation Regulation demand more than piecemeal solutions or manual processes. They require a comprehensive, integrated approach to data management that can transform regulatory compliance from a burden into a strategic advantage. Informatica's Intelligent Data Management Cloud (IDMC) provides the technological foundation necessary to address these challenges while delivering broader business benefits through improved data governance and supply chain transparency.

A Full-Fledged Enterprise Data Platform for a Massive Data Challenge

The EUDR presents what is fundamentally a data challenge of unprecedented scale and complexity. Organizations must collect, validate, store, analyze and report on vast amounts of information from diverse sources across global supply chains. This requires more than point solutions — it demands a cohesive enterprise data platform designed to handle the full compliance lifecycle.

IDMC integrates the data management required for EUDR compliance, from initial collection to final reporting. By providing a unified environment for compliance-related data, our platform eliminates the silos and fragmentation that often plague regulatory initiatives, ensuring consistency, accuracy and accessibility, while leveraging its CLAIRE AI engine to automate data governance processes for greater efficacy and efficiency. As a cloud-native solution, it also offers advanced security features, including encryption and identity management, data privacy and sovereignty support, automated reporting, monitoring and disaster recovery to support regulatory compliance initiatives.

Reference Data Management: The Foundation of Compliance

At the heart of EUDR compliance lies the need to correctly identify and classify products according to the regulation's scope. This requires precise mapping to EU nomenclature codes as outlined in the “Combined Nomenclature,” a task that demands robust reference data management capabilities.

Informatica's reference data management solution (Reference 360) provides a centralized repository for regulatory classification data, ensuring that products (Product 360) are correctly identified and mapped to the appropriate commodity categories. This eliminates the risk of misclassification that could lead to compliance gaps or unnecessary due diligence for out-of-scope products.

Data Catalog: Connecting Scattered Information

One of the critical challenges in EUDR compliance is simply knowing what data exists, where it resides and how it relates to compliance requirements. Organizations often have their relevant information scattered across multiple systems, departments and external partners, making it difficult to establish a comprehensive view of their compliance status.

Informatica IDMC’s Cloud Data Governance and Catalog (CDGC) addresses this challenge by providing a comprehensive inventory of all data assets relevant to EUDR compliance, while utilizing advanced lineage capabilities to track and manage metadata from various sources. This includes not just internal systems but also external sources such as supplier portals, third-party verification services and regulatory databases.

CDGC goes beyond simple inventory by establishing relationships between data assets, creating a network of connections that reflect the complex interdependencies in EUDR compliance. This allows organizations to trace information flows from raw material sources Material 360 through processing stages to final products, ensuring complete coverage of due diligence requirements.

Data Governance and Quality: Maintaining Evidence for Audit and Compliance

The EUDR requires maintaining compliance evidence for a minimum of five years, creating significant challenges for data governance and long-term information management. Organizations must ensure that evidence remains valid, accessible and secure throughout this period while also establishing clear chains of custody for compliance-related information.

Informatica IDMC’s CDGC, and Cloud Data Quality (CDQ) provide the framework and tools necessary to meet these requirements. Our approach establishes clear policies for data quality, retention, security and access, ensuring that compliance information maintains its integrity and evidential value over time.

The solution includes comprehensive audit trail capabilities that document all interactions with compliance data, from initial collection to verification to reporting. This creates an immutable record of due diligence activities that can be presented to regulatory authorities or third-party auditors as evidence of good-faith compliance efforts.

Supplier Portal: Collecting Geolocation Data from the Supply Chain

The EUDR places significant data collection burdens on operators, who must gather detailed information from suppliers throughout their value chains. This includes the particularly challenging requirement for geolocation data from the plots of land where commodities were produced — information that many suppliers are not currently equipped to provide in the required format.

Informatica's Master Data Management (MDM) supplier portal solution streamlines this process by providing a dedicated interface for suppliers to submit geolocation data and other required documentation. The portal includes intuitive tools for capturing coordinates, uploading supporting evidence and validating information before submission, reducing the technical barriers for suppliers with limited digital capabilities.

Traceability Solution: Linking Ingredients to Products to Supply Chains

The EUDR demands unprecedented levels of traceability, requiring organizations to maintain clear links between finished products and the specific plots of land where their constituent commodities were produced. This challenge is particularly acute for products with complex ingredient lists or those using bulk commodities that typically lose their identity during processing.

Informatica's traceability solution (Supplier 360, Material 360 and Product 360) addresses this challenge by establishing and maintaining these critical linkages throughout the product lifecycle. Our approach combines batch and lot tracking capabilities with sophisticated chain of custody documentation to create an unbroken trail from raw material to finished product.

Location Management: Mastering Geolocation Data

The geolocation requirements of the EUDR create a need for sophisticated location data management capabilities that few organizations currently possess. This includes not just storing coordinate data but also validating it, visualizing it and cross-referencing it with
satellite imagery to verify compliance with deforestation requirements.

Informatica's location management solution (Location 360) provides these capabilities as part of our master data management approach. Our solution handles both point coordinates for smaller plots and complex polygon data for larger areas, ensuring compliance with the
regulation's differentiated requirements based on plot size.

The solution includes Informatica IDMC’s Cloud Application Integration (CAI), with satellite imagery sources, including the EU's Copernicus database, enabling automated cross-referencing of geolocation data with historical land use information as well as land used by indigenous people. This critical capability allows organizations to verify that commodities were not produced on recently deforested land without requiring specialized GIS expertise.

Automated Workflow: Streamlining Due Diligence Statements

The EUDR requires operators to submit due diligence statements through a dedicated EU Information System before placing products on the market. Each statement must aggregate information from multiple sources, follow a prescribed format and receive a reference number that becomes critical for subsequent market access.

CAI’s automated workflow, which includes guides and workflow and API integration, streamlines this process by orchestrating the collection, validation and submission of due diligence information. Our approach automates the aggregation of compliance data from various systems and sources, ensuring completeness and consistency while dramatically reducing manual effort.

The solution includes pre-built connectors to the EU Information System, enabling seamless submission of due diligence statements and automated retrieval of reference numbers. These reference numbers are then systematically tracked and associated with relevant products and shipments, ensuring they can be provided to customs authorities or downstream customers as required.

Data Democratization: Empowering the Entire Organization

EUDR compliance cannot be the responsibility of a single department or team; it requires coordination and information sharing across multiple functions including procurement, legal, sustainability and supply chain management. However, many organizations struggle with data silos that prevent effective collaboration on compliance initiatives.

Informatica IDMC’s Cloud Data Marketplace (CDMP) promotes data democratization by breaking down silos and making compliance information accessible across the organization, while its Cloud Data Access Management (CDAM) ensures security and appropriate access controls are maintained. Our platform provides role-based views of compliance data, ensuring that each stakeholder has access to the information they need in a format that supports their specific responsibilities.

By extending access to compliance information beyond traditional boundaries, our data democratization approach transforms EUDR requirements from a regulatory burden into a catalyst for broader sustainability initiatives. Organizations gain visibility into their environmental impact and supply chain practices, enabling strategic improvements that go beyond minimum compliance to create genuine competitive advantage.

The EU Deforestation Regulation represents a watershed moment in global environmental governance, establishing unprecedented requirements for supply chain transparency and accountability. With penalties of up to 4% of annual EU turnover and the potential for exclusion from public procurement processes, the stakes for noncompliance are exceptionally high.

However, forward-thinking organizations recognize that EUDR compliance is not merely a regulatory burden to be minimized but an opportunity to establish leadership in sustainable business practices. By investing in robust data management capabilities that address the regulation's requirements, companies can simultaneously improve operational efficiency, reduce supply chain risks and strengthen their sustainability credentials in an increasingly environmentally conscious marketplace.

Informatica IDMC provides the technological foundation necessary to transform these regulatory challenges into strategic advantages. Our integrated approach addresses the full spectrum of EUDR compliance requirements while delivering broader business benefits through improved data governance and supply chain transparency.

The extended implementation timeline — with compliance now required by December 30, 2025, for large companies and June 30, 2026, for micro and small enterprises — provides a valuable opportunity to develop comprehensive, strategic approaches rather than rushed tactical solutions. Organizations that use this time wisely to build robust data capabilities will not only achieve compliance but position themselves for leadership in the evolving landscape of sustainable business practices.

Learn more about how our enterprise data platform can support your EUDR compliance efforts while delivering broader business value. Contact our dedicated sustainability team at esg@Informatica.com.

Together, we can transform regulatory requirements into opportunities for more transparent, efficient and sustainable business operations — protecting both your market access and our planet's irreplaceable forest ecosystems.

¹https://eur-lex.europa.eu/eli/reg/2023/1115/oj/eng