A new stage in supply chain regulation
The UK already operates a mandatory due diligence framework for timber, introduced in 2013. The Government now intends to build on this foundation through a proposed Great Britain deforestation regime, including regulations under the Environment Act 2021 and legislation strengthening the UK Timber Regulation. Northern Ireland will continue to be subject to the EU Deforestation Regulation (EUDR) under its post-Brexit arrangements.
Which companies could be affected?
The Government has stated that it intends to require businesses operating in Great Britain with annual turnover exceeding £1 million that use forest-risk commodities or wood products to undertake due diligence to ensure that those products have been produced in compliance with relevant local laws.
The proposed scope covers:
- Wood
- Cattle
- Cocoa
- Coffee
- Palm oil
- Rubber
- Soy
- Certain derived products, including chocolate and furniture
For listed companies, this means the proposals have the potential to affect a wide range of sectors, including consumer goods, retail, food production, hospitality, manufacturing, construction and industrial supply chains where these commodities may be present directly or indirectly.
Under the proposed regime, affected businesses would be expected to:
- Establish a due diligence system;
- Report on their activities;
- Maintain evidence of compliance; and
- Collect geolocation data demonstrating the origin of the relevant products.
The legislation implementing the regime is expected to be delivered in 2027.
Alignment with the EU Deforestation Regulation
The Government has indicated that the proposed British requirements will operate consistently alongside the EU Regulation on Deforestation-free Products under the EUDR in order to support the UK internal market, reduce regulatory divergence and support export-led growth.
The proposed British approach is expected to cover the same core commodities and broadly similar underlying information requirements as the EUDR. The aim is to allow businesses to use consistent data, traceability standards and due diligence processes across Great Britain, Northern Ireland and EU operations, while avoiding unnecessary duplication.
For companies with European operations or supply chains that reach both Great Britain and EU markets, the Government's stated objective is that information held by businesses for compliance with the proposed Great Britain regime will be broadly equivalent to that required under the EUDR.
EUDR compliance timetable
The EUDR regulates commodities commonly associated with deforestation, including wood, cattle, cocoa, coffee, palm oil, rubber and soy, together with specified derived products such as chocolate and furniture.
The Government states that UK businesses operating within the EU or placing relevant products on the EU or Northern Ireland markets, will be required to comply with the EUDR.
The implementation timetable set out in the policy paper is:
- Large and medium companies: from 30 December 2026.
- Micro and small companies: from 30 December 2026 for wood products currently covered by the EU Timber Regulation, and from 30 June 2027 for all other relevant products.
The paper also explains that businesses that first place goods on the market must ensure those goods are accompanied by a due diligence statement.
Looking beyond illegal deforestation
While the immediate focus is on addressing illegal deforestation, the Government has signalled a longer-term ambition to move towards a fully deforestation-free standard. Under such an approach, relevant products would ultimately need to be produced without any deforestation, regardless of whether local laws had been complied with.
This indicates that the proposed regime may represent a first step in a broader evolution of supply chain expectations and environmental accountability requirements.
Conclusion
The Government's policy paper signals a significant expansion of due diligence expectations relating to deforestation-linked supply chains. The proposed framework would extend obligations beyond timber to a wider range of commodities and derived products, introduce geolocation-based traceability requirements and seek close alignment with the EU's deforestation framework. Northern Ireland continues to apply certain EU goods rules under the Windsor Framework arrangements. The Government notes that EUDR implementation in Northern Ireland is intended to preserve Northern Ireland's access to the EU single market while the proposed Great Britain regime is designed to operate consistently alongside it.
Businesses are coming under increasing pressure to undertake appropriate due diligence on their supply chain partners, as a result of various legal initiatives emerging at EU level which seek to impose a level of mandatory ESG-related supply chain due diligence on in-scope companies. These initiatives may affect organisations directly (because they are "in-scope") or indirectly (because they are part of the supply chain of an in-scope organisation). They will also impact on the need for internal policies or codes of conduct, and influence or prescribe contractual provisions to be included in supply chain partner contracts.
Key takeaways for Company Secretaries
Although the policy paper is primarily focused on environmental and supply chain regulation, the proposed regime may have implications for governance and oversight arrangements within listed companies. Boards, audit committees, sustainability committees and company secretaries may have an interest in how organisations gather, verify and report supply chain due diligence information, particularly where disclosures form part of wider ESG, sustainability or risk management reporting processes. The proposed requirement for geolocation data and documented due diligence systems may also increase the governance focus on internal controls relating to supply chain transparency.
We recommend you keep abreast of developments in regulation and legislation and consider any enhancements in governance and oversight arrangements.
Further information can be found on the Department for Environment, Food & Rural Affairs website.
About the author:
Karen O’Donnell is Governance & ESG Knowledge Manager at Equiniti, where she provides expert insight on regulatory developments, corporate governance and shareholder engagement to support issuers navigating an evolving market landscape.