As the enforcement date for the EU Deforestation Regulation (EUDR) approaches, businesses trading cocoa, coffee, soy, rubber, oil palm, and other commodities must take proactive steps to avoid serious compliance risks.
One key area of concern? Substantiated concerns—a powerful mechanism that can lead to investigations, fines, and even legal action if due diligence falls short.
Following our recent panel discussion on this issue, here are the critical takeaways for traders and operators.
Compliance isn’t enough: Why your processes could still face scrutiny
Under the EUDR, relevant stakeholders—such as an NGO or other third party—can file a substantiated concern if they believe a company’s due diligence efforts are inadequate. This means that even if you think you are compliant, an external party may challenge your processes, triggering an investigation.
Authorities are obligated to investigate substantiated concerns within six weeks. If a company is found to be non-compliant, administrative measures such as cease-and-desist orders can be issued. Continued violations after re-inspection can lead to financial penalties—which, given high cocoa prices, could be substantial.
In severe cases, authorities may even refer cases to the criminal prosecutor’s office. Notably, investigations under previous regulations, such as the EU Timber Regulation (EUTR), have even reached the high court. Companies should not underestimate the potential impact of an investigation under EUDR.
The challenge of incomplete data in supply chains
One of the most significant risks for traders and operators is traceability gaps. EUDR requires plot-level traceability, yet many supply chains—particularly those relying on indirect sourcing—still struggle with incomplete data.
Failure to prove exactly where your commodity comes from could be enough for an NGO to raise a substantiated concern, even without direct evidence of deforestation. Companies must act now to close these data gaps before enforcement begins.
NGOs are already monitoring and preparing cases
NGOs and watchdog organisations are actively monitoring supply chains using real-time satellite data, shipment records, and supply chain mapping. Some NGOs focus on risk assessments, while others are already compiling and preparing cases against companies they believe to be non-compliant.
In many instances, NGOs collaborate to harmonise their efforts and aggregate data, making substantiated concerns harder to dispute. Companies should expect increased scrutiny regardless of their preparedness.
Public disclosure adds pressure
Investigations and violations under EUDR are subject to public disclosure, increasing reputational risks for businesses. Simply issuing a due diligence statement will no longer be enough—companies need verifiable evidence that their supply chains are deforestation-free and legally compliant.
Furthermore, deforestation isn’t the only compliance risk. Land tenure disputes and legality risks are also high on enforcement agendas, meaning companies must address these challenges proactively.
What businesses should do now
To mitigate compliance risks, traders and operators must take immediate action:
✅ Strengthen traceability: Establish direct sourcing relationships and ensure robust geolocation data.
✅ Engage with suppliers: Support indirect suppliers to ensure they can provide necessary compliance data.
✅ Monitor risk exposure: Assess data quality, deforestation risks, and legality concerns to identify vulnerabilities. (e.g., through Meridia Verify®)
✅ Prepare for scrutiny: Develop a response strategy for potential substantiated concerns.
A huge thank you to our expert panellists for sharing their insights! (From left to right)
- Sarah Drost, Senior Research Consultant at AidEnvironment
- Valentin Guye, Postdoctoral Researcher at UC Louvain and Trase
- Meriam Wortel, Coordinating Specialist Inspector at Nederlandse Voedsel en Warenautoriteit - NVWA
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