Navigating Eudr Impact and Uncertainty in the Packaging Industry

The European Union Deforestation Regulation (EUDR), which has been generating headlines since 2023, is one of the most stringent supply chain regulations and is aimed at ensuring that products placed on the EU market are not linked to deforestation. Designed to eliminate deforestation-linked products from the EU market, the regulation introduces stringent requirements around traceability, sourcing, and due diligence. While the regulation does not explicitly target packaging, its implications for the industry are significant. As a result, packaging manufacturers must now trace raw materials back to their origin, often to the forest plot level, and provide verifiable proof of compliance. As compliance timelines approach, those manufacturers that proactively build traceability capabilities and strengthen supplier ecosystems will be better positioned to navigate the shift.

Whether EUDR ultimately acts as a disruption or a catalyst for innovation will depend on how effectively the industry adapts to this new reality.

An overview of the regulation

The European Union Deforestation Regulation (EUDR) was introduced in 2023; however, its implementation has been postponed. It is yet to come into force and is expected to apply from 2026. It is designed to ensure that products sold within the EU market do not contribute to global deforestation.

The regulation introduces extensive due diligence requirements for businesses and their supply chains. These requirements apply to all businesses seeking to import, export, or trade in seven key commodities (cattle, cocoa, coffee, palm oil, rubber, soy, and wood) along with specific products derived from these commodities (e.g., paper, packaging, and leather).

The regulation introduces a ban on these products being marketed in the EU, or exported from it, unless they are verifiably deforestation-free and produced in accordance with relevant legislation (e.g., regulations covering land use rights, environmental protection, labor, and human rights).

Implications for packaging companies

The EUDR primarily targets commodities and products linked to deforestation. While the regulation does not directly target packaging materials, it can indirectly affect certain types of packaging that are derived from the specified commodities. These would include paper and board packaging, derivatives of palm oil, rubber used for seals; gaskets; and protective gloves used in the packaging process, and cattle that provide leather.

Given that these packaging formats are derived from wood, a commodity explicitly covered under the regulation, companies must ensure their raw materials are sourced from non-deforested areas. This introduces a new level of accountability in sourcing and supply chain verification.

The scale of exposure is substantial. According to World Wildlife Fund:

• The pulp and paper sector represents 13–15% of global wood usage
• It consumes 33–40% of all industrial wood traded internationally

In parallel, the EU imported over 6 million tonnes of market pulp in 2023, largely from regions such as Brazil, North America, and Chile, which have historically faced deforestation risks. This combination of scale, sourcing complexity, and regulatory pressure is what makes EUDR particularly consequential for packaging.

EUDR compliance and challenges faced

Complying with the EUDR requires companies to implement rigorous due diligence across their entire supply chain. Businesses must submit a formal Due Diligence Statement under the broader Corporate Sustainability Due Diligence Directive, demonstrating that the goods they trade are fully compliant.

This is not a simple box-ticking exercise. It involves detailed data collection to establish end-to-end traceability, often down to precise geolocation. Companies must provide GPS coordinates for suppliers, buyers, and land plots and clearly prove that their products are deforestation-free. In practical terms, this means verifying that no materials originate from land that has been deforested or degraded since December 31, 2020.

The consequences of non-compliance are significant and hard to ignore:

• Financial penalties: Fines of up to 4% of annual EU turnover
• Operational impact: Risk of product seizures and loss of revenue
• Reputational damage: Particularly severe for brands positioned around sustainability and “green” values

Large operators are required to comply by December 30, 2026. However, given the complexity of upstream supply chains, the real challenge lies in building capabilities well before this deadline.

Compliance strategies for packaging companies to ensure alignment with EUDR

To stay ahead, packaging companies need to act decisively:

• Map and assess supply chains end-to-end
• Work closely with suppliers to ensure transparency and compliance
• Invest in certification systems and digital traceability tools
• Build internal awareness through policies and training

Early movers will not only reduce risk but also gain a competitive edge as transparency becomes a market expectation.

A structural shift and not just a regulation

EUDR is more than a sustainability mandate; it is reshaping the fundamentals of the packaging industry.

• Traceability will redefine competition: Cost and scale will take a backseat to transparency and data-driven supply chains
• Costs will rise: Investments in systems, audits, and compliance will increase operational burden
• Material strategies will evolve: Even paper packaging faces scrutiny, accelerating demand for recycled alternatives

These shifts will likely push companies to rethink pricing, portfolios, and sourcing strategies. In the long run, higher costs may also impact on the global competitiveness of European packaging exports.