European Deforestation Regulation compliance – are you ready?

In this interview, our expert from Colombia – Tatiana Londoño, discusses the need to comply and to engage suppliers in regions such as Latin America to get ready for the December 2025 deadline.

Can you elaborate on your role in helping suppliers prepare for the EUDR? Which countries do you focus on?

Currently, I am assisting clients in Colombia and Guatemala. However, our position as a global law firm and our ability to interpret local civil law legislation and its applicability to international standards enable us to provide assistance to suppliers in any country within Latin America or other regions.

What kinds of suppliers do you typically work with — large corporations, smallholders, cooperatives?

Traditionally, we have collaborated with large corporations or brokers who serve as suppliers to smallholders. However, it is anticipated that we initiate work with other types of companies as the deadline for applicability approaches.

How early did your clients start asking for advice on the EUDR, and what was their initial reaction on the EUDR?

Our initial advisory engagements commenced approximately one year ago, in May 2024, coinciding with the applicability deadline for EUDR, which was set for December 2024. Since then, we have witnessed an increase in the number of clients seeking to enhance their preparation strategies in line with the latest guidance and frequently asked questions (FAQs) issued by European authorities.

From your experience, how well-prepared are non-EU suppliers at the moment?

Supplier preparation varies significantly among different suppliers. Generally, large corporation suppliers from regions with robust legislative systems, such as Latin America, and multinational subsidiaries have demonstrated a quicker and more thorough approach to preparation. Additionally, membership in producer associations has played a crucial role in gaining information from European suppliers regarding their requirements.

However, suppliers from regions with weaker legislative and governmental regulations have encountered greater challenges in preparing. This is primarily due to the EUDR’s stringent requirement for a comprehensive report of local legal compliance. In many countries, there is either widespread informality and lack of legal enforcement in aspects like labor law and land ownership controls or no legislation at all.

Complying with EUDR requirements often necessitates a profound cultural shift for smallholders and producers, especially regarding legal formalization, which is considerably more challenging and takes more time. Consequently, suppliers facing these difficulties are encountering significant preparation obstacles.

What are the most common challenges suppliers face when trying to comply with the EUDR?

One of the most significant challenges faced by suppliers in ensuring EUDR compliance is the lack of clear guidance from European regulation, authorities, and buyers. This is particularly concerning considering that core guidance was only released just weeks before the initial December 31st deadline was set to expire. In most cases, direct suppliers to European operators collaborate with their own producer suppliers, who, according to EUDR, are responsible for fulfilling the local legislation compliance requirement. However, obtaining guidance on the specific requirements of each legislation category often involves a lengthy support process for smallholders, making it difficult for them to procure documents demonstrating compliance.

Another common challenge faced by smallholders in many regions worldwide is the lack of agricultural formalization, including the formalization of companies and labor contracts and laws. This refers to labor informality, which involves the absence of written contracts and daily cash payments for labor with limited or no traceability. In some countries, over 90% of the agricultural sector is informal, and there is little or no governmental support for formalization. Ensuring compliance with the EUDR e.g. requires teaching smallholders how to create written labor contracts in countries with very low literacy levels, while also addressing the complexities of evidencing compliance with more advanced issues such as environmental laws, taxes, and human rights. 

How complex is it for suppliers to prove compliance with local laws in their own countries, especially when these laws differ from EU standards?

If you are referring to large corporate suppliers with robust legal teams and access to international law firm advice on interpreting EUDR requirements regarding internal legislation, the process would not be overly complex. Large corporations typically have robust compliance processes that are easily traceable. However, these are not the majority of suppliers. In Latin America, Africa, or Southeast Asia, most suppliers in the agricultural sectors rely on smaller suppliers who are the owners or administrators of the land where products are grown. These smaller suppliers are the ones who are typically called upon by EUDR to provide evidence of local law compliance. Based on our observations, evidencing lack of deforestation through geolocalization and satellite imaging is the most straightforward requirement of EUDR, while local legal compliance presents the greatest challenge.

What kind of documentation gaps do you see most frequently?

The most common documentation gaps encompass topics that extend beyond the fundamental legal regulations most countries possess, such as those pertaining to human rights and indigenous populations. For instance, it is uncommon for a smallholder in the agricultural sector to have access to such documentation. However, there are more fundamental documents that are also challenging to locate, varying depending on the source country. For instance, many countries mandate written labor contracts but do not enforce their application in the agricultural sector. Similarly, land ownership and usage documentation may be scarce in certain countries, as it depends on the specific legislation of each nation and its level of enforcement.

What role does government or local authority engagement play in preparing suppliers for EUDR?

Although local authorities or governments should assume a significant role in preparing their suppliers for the EUDR, this is not the norm, particularly in Latin America. Governments of European countries, such as Germany, have, however, taken a more prominent position in providing tools for their extensive suppliers through international cooperation initiatives, thereby facilitating preparation on their territories in the relevant field. Nevertheless, local states continue to play a crucial role in supplier preparation through the regulation and implementation of fundamental legal aspects incorporated into the EUDR requirements. Consequently, they provide suppliers with the necessary frameworks and documentation to adhere to the local law compliance obligations.

 What kind of support (legal, technical, financial) do you think suppliers need the most right now?

The most critical support required by suppliers lies in the legal domain. Specifically, they need to comprehend the requirements of the EUDR and ensure compliance with local laws. This understanding should be translated to supporting them in obtaining their national legislation documentation promptly. Furthermore, if suppliers still lack the technical geolocalization requirements, they require support in this area as well. In my experience, many suppliers obtained these technical services in 2024 before the law was set to come into effect. This was because the guidance and specifications for this requirement were established earlier than the guidance for legal requirements, allowing suppliers to procure the necessary services in advance.

How can companies in Europe help their suppliers in non-EU countries to comply with the EUDR.

Undoubtedly, European companies must initiate direct communication with their suppliers, providing comprehensive guidance on the documentation necessary to comply with the EUDR. This guidance should encompass assistance in determining whether specific local laws or documents meet the legal requirements of the EU. It is imperative to avoid placing the burden of interpreting both European and local law on suppliers, as this can expose them to legal risks of non-compliance with EUDR, particularly for European buyers, well before the regulation’s implementation, leaving them with limited time to address these issues.

 How does CMS and you specifically support European companies and non-European suppliers at the moment?

As CMS, we have been providing support to non-European suppliers by assisting them in comprehending their national jurisdictions in accordance with EUDR. Additionally, we have collaborated with legal teams on the ground, even in countries where CMS does not have physical offices, to enable us to offer this guidance. Specifically, we have provided assistance to companies in identifying supporting documentation for each of the local law requirements and interpreting changes and additional guidance issued by EU authorities. We have also helped companies develop strategies to obtain this documentation from both small and large supply chains, ensuring that they meet the traceability requirements and that their technical geolocalization and non-deforestation regulatory objectives are met. Furthermore, we have provided support to companies that operate through their own subsidiaries in Europe, thereby being directly bound by EUDR as European operators themselves. In this capacity, we have gained valuable insights from lawyers working in our CMS European offices, requiring occasional support in interpreting realities in global regions in the context of European regulations.

Are suppliers restructuring their supply chains or dropping certain sources because of EUDR risks?

Indeed, the lack of compliance with local laws and the challenges in assisting certain suppliers to meet the deadline have led suppliers to prioritize smallholders and other compliant suppliers.

Although the legislation emanating from the Green Deal is commendable for raising global awareness about the applicability of environmental and human rights corporate obligations, the absence of clear guidance and sufficient time for preparation poses a risk of generating the opposite effect of influencing change. This could result in the exclusion of small and medium-sized companies from European supply chains.

If you could change one thing about the EUDR to make it more practical, what would it be?

Certainly, I would advocate for the simplification of the burden of proof regarding local legal compliance, particularly with such a broad spectrum of legal areas. The focus should remain on the primary objective of the regulation, which is to combat deforestation. While it is possible to consider excluding products that are grossly in violation of human rights or local laws, this should only be done on a case-by-case, accusatory basis. The burden of proof for compliance with such a vast array of issues for companies with extensive supply chains presents a significant undertaking and will likely introduce numerous compliance challenges.

What are the opportunities that the EUDR presents for companies in Latam?

If there is clear and timely guidance to suppliers regarding deforestation and legal compliance, this presents an opportunity for growth and formalization for hundreds of small or medium-sized farmers who would otherwise lack an incentive to comply with local laws. Furthermore, despite its challenges, the Latin American region possesses relatively robust legislative protections and institutional frameworks. With appropriate efforts, companies can comply with these regulations, thereby enhancing their competitiveness in global markets.