How to conduct effective due diligence for raw materials at risk of deforestation.
If your company imports raw materials or products that may contribute to deforestation (such as cocoa, coffee, timber, palm oil, rubber, soy, or cattle), you should be aware that under the new European regulation known as the European Union Deforestation Regulation (EUDR), due diligence becomes a mandatory step.
This issue directly concerns Italian businesses. According to the report “Deforestation Made in Italy” (Etifor and the University of Padova, 2026), Italian consumption of these same commodities put 594,000 hectares of forest at risk between 2005 and 2023, placing Italy third in the EU for per capita embedded deforestation. Robust due diligence is therefore not just a regulatory obligation, but a tool to manage real exposure.
In this article, you will learn:
- What due diligence means
- When it is required and what benefits it offers to companies
- How it relates to the EUDR and supply chain sustainability
- How Etifor can support your company in effectively managing this process
What is due diligence?
Due diligence is a systematic process of collecting and analyzing information to assess the risks and opportunities associated with a business activity, production site, supply chain, or an investment. At the corporate level, it is mainly used to verify compliance with applicable regulations and to reduce the risk of legal penalties or reputational damage.
There are different types of due diligence, including environmental , financial, legal, tax-related, and real estate due diligence.
In this context we focus on the environmental and regulatory compliance aspects, which are becoming increasingly crucial in light of the evolving regulatory framework of the European Union.
When is Due Diligence required and why is it useful for companies?
Due diligence is not always legally required, but it is essential to protect businesses and strengthen their competitiveness. For example, it is commonly used: . For example:
- in Mergers & Acquisitions, to ensure the target company is compliant and free from environmental liabilities
- In the management of industrial sites, to prevent damage and legal disputes
- In supplier relationships, to ensure that purchased products v meet the environmental standards required by customers or the market (a typical example being large-scale retail supply chains)
Increasingly, ESG due diligence – which includes environmental, social, and governance aspects – is also required by banks and investors within the context of sustainable finance.
Moreover, with the entry into force of the EUDR – the European regulation governing the import of products at risk of deforestation – all companies importing raw materials such as timber, cocoa, coffee, soy, palm oil, or beef are subject to mandatory regulatory due diligence obligations, aimed at ensuring that products are “deforestation-free.”.
Due diligence and the EUDR: What does the new regulation require?
Following the amendments adopted in December 2025, the European Union Deforestation Regulation (EUDR) establishes that, as of 30 December 2026 for large operators and 30 June 2027 for small operators and natural persons, companies placing certain products on the EU market must demonstrate that these products are not linked to deforestation or forest degradation.
The regulation introduces a formal due diligence obligation, which—after the December 2025 amendments—is now focused on the initial operator and simplified for downstream operators. This process requires:
- full traceability and documentation of the supply chain back to the origin;
- collection of geolocation data for production plots to demonstrate the absence of deforestation after 31 December 2020
- risk assessment related to suppliers and sourcing areas, including compliance with the legislation of the country of origin
- implementation of corrective measures in case of identified risks, before products are placed on the EU market.
In this context, due diligence is a regulatory obligation, but compliance activities also provide valuable information that can make supply chains more transparent and sustainable, turning a legal requirement into an operational and strategic tool for improving overall supply chain management and sustainability.
If you want to learn more about the EUDR and how to comply, check out our services for deforestation-free supply chains.
How to prepare: Etifor’s support for effective due diligence
How can due diligence be carried out effectively? And, above all, who is capable of conducting it properly?
Not all companies have sufficient internal expertise and resources to manage the complex environmental and legal requirements imposed by regulations such as the EUDR . For this reason, it is essential to rely on specialized consultants.
Etifor supports companies through an integrated approach that includes:
- Preliminary risk analysis (screening of supply chains and products)
- Development of traceability strategies and EUDR compliance frameworks
- Digital tools for data collection and management
- Training of internal staff
- Support in engagement with suppliers and stakeholders.
Thanks to our experience in deforestation-free supply chains and Nature Positive strategies, we help companies turn due diligence from a regulatory obligation into a competitive advantage.
Rely on Etifor for your environmental due diligence
In summary, due diligence is now a fundamental tool for any company that wants to:
- Prevent legal and reputational risks
- Ensure the sustainability of its supply chain
- Comply with the new EUDR regulation
How much does due diligence cost? How long does it take? This depends on the complexity of the supply chain and the level of risk involved. Our team is available to conduct a preliminary assessment and design a tailor-made approach.
Contact us to request a personalized assessment and find out how we can help make your due diligence more robust, transparent, and sustainable.