Data company claims material risk of deforestation from EUDR
A data analytics company believes that deforestation is no longer just a reputational concern, it is now a material risk with 'regulatory teeth'.
GlobalData claims that with the EU Deforestation Regulation (EUDR) taking effect in December 2025, companies across different sectors must prove their supply chains are deforestation-free or face severe penalties.
It believes that the shift demands urgent action on traceability, supplier engagement, and sustainability strategy to preserve access to critical markets.
The upcoming EUDR is a commodity-based regulation, that requires companies importing deforestation-intensive commodities to the EU to provide evidence that these products' supply chains are deforestation-free.
GlobalData claims that companies that fail to comply could face a fine of up to 4% of their EU revenue or a temporary suspension from the EU market.
Deforestation
Strategic intelligence analyst at GlobalData, Aoife McGuirk believes that for many years certain companies have faced 'operational regulatory risk' if their operations directly contribute to the problem.
She also said that the introduction of the EUDR from December 2025 means far more companies will need to mitigate the supply chain regulatory risk they face.
GlobalData has claimed that the agricultural sector faces the highest level of regulatory risk 'across the board', with the second most exposed sector being the consumer.
McGuirk said: 'Every company needs a strategy to mitigate deforestation risk in its many forms. GlobalData has five key recommendations companies should follow when implementing such a strategy.
'One of the biggest challenges for EUDR compliance is ensuring that supply chains are fully transparent.'
'Artificial intelligence (AI) can support anti-deforestation efforts by monitoring forests and using predictive analytics to predict where deforestation will occur, allowing stakeholders to prevent it,' she added.
GlobalData also highlighted that companies should set a robust no-deforestation target to signal to consumers and regulators that they are serious about their forestry efforts.
It has encouraged companies to engage with suppliers throughout the value chain to strengthen accountability and explicitly integrate the risk into their business strategies.
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