The International Trade Center and Sustainable Trade Initiative help smallholder coffee farmers and SMEs implement the European Union Deforestation Regulations. Photo credit: Nestlé
The European Union Deforestation Regulation (EUDR) and the Corporate Sustainability Due Diligence Directive (CSDDD) represent a seismic shift in global trade, pushing companies toward stricter environmental and human rights accountability. While their goals are clear—curbing deforestation and ensuring ethical supply chains—their implementation has proven far from straightforward. Businesses across the value chain, particularly smallholders and SMEs, struggle to meet new compliance demands. Organizations such as the International Trade Center (ITC) and the Sustainable Trade Initiative (IDH) are helping bridge the gap, offering technical support, and policy insights to ease the transition.
Data collection and verification are among the most significant challenges businesses face under the EUDR. Many smallholders lack the technology and expertise to generate detailed geolocation data and legality records, which are key requirements for proving deforestation-free sourcing.
“Many smallholders are not aware of EUDR requirements,” noted Michaela Summerer, Associate Expert at ITC. They are being asked to provide data they’ve never needed before, and without the proper support, they risk being locked out of the market. Even when businesses can collect the necessary data, interoperability between traceability systems remains a persistent problem. Smallholders often sell to multiple buyers, each requiring slightly different reporting formats. “Traceability should not mean duplicating efforts,” added Mathieu Lamolle, Senior Advisor on Sustainability at ITC.
Financial constraints compound these issues. Compliance requires investments in technology, monitoring systems, as well as administrative and legal capacities—costs that many SMEs struggle to bear. While large corporations can absorb these expenses, smaller businesses risk exclusion from the EU market if they cannot afford the necessary infrastructure. At the same time, geospatial mapping discrepancies add another layer of complexity. Different data sources—ranging from national authorities to independent research organizations—sometimes contradict one another, making it difficult for companies to determine whether their sourcing areas are compliant.
Beyond technical and financial hurdles, the reality of complex global supply chains creates further challenges. Before reaching the EU, many commodities pass through multiple intermediaries, making full traceability difficult. “There’s a disconnect between the regulation's requirements and supply chain realities,” Lamolle explained. This problem is particularly evident in mixed commodity supply chains. Businesses handling products that combine different ingredients struggle to determine which regulatory requirements apply.
To address these challenges, organizations like the ITC and IDH are working to provide free and practical solutions for helping stakeholders understand and comply with these new regulations. They offer training programs and workshops to help SME understand compliance requirements, develop interoperable traceability systems to reduce redundancy like the ITC Deforestation Free Trade Gateway, create guiding documents like the step by step handbooks on EUDR and advocate for integrated stakeholder solutions that balance sustainability goals with economic realities like IDH living income calculator. As the EUDR and CSDDD continue to unfold, the success of these regulations will depend not just on enforcement but on the ability of global stakeholders to collaborate, innovate, and ensure that compliance is both feasible and inclusive.