The EU Deforestation Regulation (EUDR) requires companies to ensure products sold in the EU are deforestation-free and legally sourced. It comes into effect on 30 December 2026, with large operators required to comply immediately, while SMEs may have a transition period.
SGS Thailand BlogMay 28, 2026
In recent years, the concept of “Sustainability” has evolved from being merely a corporate image into a structural requirement of the global economic system. Today, organizations are no longer evaluated based on what they claim, but on what they can demonstrate and verify. A key driver of this transformation is the EU Deforestation Regulation (EUDR), which is fundamentally reshaping how companies manage supply chains, collect data, and mitigate risk.
What is EUDR? Overview and Impact on Supply Chains
The EU Deforestation Regulation (EUDR) is a European Union regulation that requires products placed on the EU market to be deforestation-free.
It officially comes into force on 30 December 2026 and is considered one of the most stringent environmental regulations introduced by the EU.
Which Commodities Are Covered Under EUDR?
EUDR applies to seven key commodities and their derived products:
- Timber and wood products
- Cattle
- Palm oil
- Cocoa
- Coffee
- Soy
- Rubber
Key Requirements Under EUDR
Organizations placing products on the EU market must demonstrate that:
- Products Are Deforestation-Free
Products must not originate from land subject to deforestation or forest degradation after 31 December 2020, directly or indirectly.
- Legal Compliance in Country of Origin
Production must comply with all applicable laws, regulations, and land rights in the country of origin.
- Verifiable Due Diligence System (DDS)
Companies must implement a Due Diligence System and issue a Due Diligence Statement (DDS), including plot-level geolocation data (GPS coordinates) of raw material sources.
- Risk Management Framework
Organizations must assess and mitigate risks across the entire supply chain through systematic processes.
Key Insight: Traceability is no longer a best practice — it is now a regulatory requirement. Companies must be able to identify: Where raw materials originate (plot-level), Who handled them across the supply chain, How risks are assessed and mitigated
FSC™ Chain of Custody (CoC): Principles and Role in Supply Chains
The Forest Stewardship Council™ (FSC™) is an international organization promoting responsible forest management. The FSC Chain of Custody (CoC) is a system that tracks certified materials from forest to final product.
How FSC CoC Works
FSC CoC functions like a continuous thread through the supply chain: Certified forest → Processor → Manufacturer → Distributor → Final product Every entity in this chain must hold CoC certification to ensure product integrity and labeling eligibility.
Key Benefits of FSC CoC
- Verified Traceability Tracks materials from origin to final product
- Global Recognition Widely accepted in international and EU markets
- Due Diligence Support Structure Includes risk assessment and control processes aligned with EUDR principles
- Reduced Compliance Costs Existing FSC systems can support EUDR readiness, minimizing duplication
FSC CoC vs EUDR: Key Differences
Many organizations assume “Having FSC = automatic EUDR compliance” This is not correct.
| Aspect | FSC Chain of Custody | EUDR |
|---|---|---|
| Type | Voluntary Standard | Mandatory Regulation |
| Regulation Scope | Forestry-based products | 7 regulated commodities |
| Responsibility | Entire supply chain | Operator & Trader |
| Data Requirements | Certificate number, species name, and raw material volume | Geolocation (GPS coordinates) at plot level, and Due Diligence Statement |
| Verification | Third-party certification bodies | EU Competent Authorities |
| Common objective | Reduce deforestation and build a transparent supply chain | |
Important Note: FSC CoC is a powerful supporting tool — but it does not guarantee EUDR compliance. Companies must still: Build a separate Due Diligence System, Conduct additional risk assessments, Collect geolocation data at plot level
Due Diligence System (DDS): What Organizations Must Do
Under EUDR, companies must establish a Due Diligence System (DDS) with three core components:
- Information Collection
Organizations must collect key data including product and commodity information, country of origin, geolocation coordinates at the plot level, and detailed supplier information to ensure full traceability across the supply chain.
- Risk Assessment
Companies are required to assess potential risks by evaluating country-level deforestation risks, legal enforcement conditions, and the overall complexity of the supply chain.
- Risk Mitigation
If the identified risk is not negligible, organizations must implement additional mitigation measures such as document verification, independent audits, as well as product sampling and inspections to ensure compliance.
From Certification to System Thinking: A Critical Shift
The most important transformation in the EUDR era is the shift from: “Having a certificate” → “Having a system”
Strategic Insight: Certification = Foundation | Compliance = Capability, Certification is only the starting point.
True compliance depends on an organization’s ability to:
- Manage data continuously
- Track materials across the supply chain
- Demonstrate verification at any time
The Future: Verifiable Supply Chains
EUDR is not just a regulation — it is a signal of where global trade is heading.
Organizations that adapt will:
- Maintain access to the EU market
- Strengthen trust with international partners
- Improve ESG performance and investment attractiveness
FAQs
FSC CoC is a traceability system that tracks forest-based materials from certified forests through processing and distribution to the final product. Every company in the chain must be certified to maintain product integrity.
No. FSC CoC is a strong foundation but does not automatically ensure compliance with EUDR. Companies must still implement a Due Diligence System and collect additional data, particularly plot-level geolocation information.
Traceability is the ability to track and verify the origin and movement of products across the supply chain. Under EUDR, it is mandatory and must include geolocation data and risk assessment evidence.
Yes. Any company exporting relevant commodities (e.g., rubber, wood, coffee, cocoa) to the EU must comply with EUDR requirements, either directly or as part of the supply chain.
Penalties may include:
- Fines proportional to environmental damage
- Market access restrictions in the EU
- Product confiscation or destruction
- Temporary exclusion from public procurement
- Reputational damage
About SGS
SGS is the world’s leading Testing, Inspection and Certification company. We operate a network of over 2,500 laboratories and business facilities across 115 countries, supported by a team of over 100,000 dedicated professionals. With more than 145 years of service excellence, we combine the precision and accuracy that define Swiss companies to help organizations achieve the highest standards of quality, compliance and sustainability.
Our brand promise – when you need to be sure – underscores our commitment to trust, integrity and reliability, enabling businesses to thrive with confidence. We proudly deliver our expert services through the SGS name and a portfolio of trusted specialized brands, including Applied Technical Services, Brightsight, Bluesign and Nutrasource.
SGS is publicly traded on the SIX Swiss Exchange under the ticker symbol SGSN (ISIN CH1256740924, Reuters SGSN.S, Bloomberg SGSN SW).
238 TRR Tower, 19th-21st Floor, Naradhiwas Rajanagarindra Road,
Chong Nonsi, Yannawa, 10120,
Bangkok, Thailand