Nestlé and Mondelēz overhaul cocoa sourcing to meet EU deforestation law compliance by 2025

As the European Union’s landmark deforestation law moves into enforcement, global food majors Nestlé (SWX: NESN) and Mondelēz International (NASDAQ: MDLZ) are fast-tracking an overhaul of their cocoa procurement systems. Effective from January 1, 2025, the EU Deforestation Regulation (EUDR) prohibits the sale of cocoa-derived products in European markets unless traceability to non-deforested land can be verified post-December 2020.

For chocolate giants that collectively source over 30% of the world’s cocoa—primarily from Ghana and Côte d’Ivoire—the implications are profound. Supply chain redesigns, traceability audits, supplier reassessments, and digital compliance systems are no longer ESG niceties. They are legal necessities in the EU’s post-deforestation regime.

Why Is the EU’s Deforestation Regulation Reshaping Global Cocoa Sourcing?

The EUDR, adopted in 2023 and entering full enforcement in 2025, is a policy milestone that bans imports of products linked to deforestation—defined expansively to include legal as well as illegal land clearance. It applies to seven commodities: cocoa, coffee, soy, palm oil, timber, rubber, and cattle. Under the regulation, companies must geolocate each plot of land from which their raw materials are sourced, provide verifiable non-deforestation evidence, and submit due diligence statements to EU authorities.

For cocoa, where production is often smallholder-driven and fragmented across tens of thousands of farms, compliance requires radical supply chain digitization. Satellite mapping, blockchain traceability, and dynamic risk scoring are replacing spreadsheets and field agent logs. With the cocoa sector historically associated with deforestation-linked expansion—especially in protected reserves of West Africa—the bar has been dramatically raised.

Nestlé and Mondelēz, as top-tier market participants, face both legal exposure and reputational risk. More critically, the regulation forces a hard reevaluation of supplier portfolios, including cooperatives and processors that may lack the digital infrastructure for compliance.

What Is Nestlé Doing to Comply With the EUDR—and Redesign Its Cocoa Chain?

Nestlé, the Swiss food and beverage giant behind brands like KitKat and Cailler, has long maintained a sustainability narrative around its cocoa sourcing via the Nestlé Cocoa Plan, launched in 2009. But 2025 marks a structural pivot, not a symbolic one.

The company has committed to full geolocation of all cocoa farms supplying its European markets, using satellite monitoring from partners like Earthworm Foundation and Sourcemap. Nestlé’s procurement strategy now includes farm-level GPS mapping, deforestation risk assessments, and dynamic exclusion protocols for non-compliant sources. If a farming plot cannot be digitally verified as deforestation-free post-December 2020, it is simply dropped from the supply chain.

As of June 2025, Nestlé reports that 96% of its EU-facing cocoa volume is EUDR-aligned, with final integration expected before the Q4 audit window. In tandem, the company is reducing reliance on opaque intermediary traders and prioritizing direct sourcing models where farm traceability can be locked in digitally at origin. Pilot programs in Ghana’s Ashanti and Western North regions show real-time yield tracking and risk tagging via AI-powered mobile platforms.

The compliance drive is also pushing Nestlé into closer strategic relationships with vertically integrated suppliers like Cargill, whose circular logistics and renewable energy investments in West Africa and the Netherlands now offer not just emission cuts—but traceability continuity from pod to port.

How Is Mondelēz Responding to the EUDR and Strengthening Its Cocoa Life Program?

Mondelēz International, the Chicago-based maker of Milka, Cadbury, and Toblerone, is also in transformation mode. The company’s signature sustainability vehicle, Cocoa Life, has expanded from a farmer livelihood program to a compliance-first procurement model.

In 2024, Mondelēz accelerated digital onboarding of cocoa farms in Côte d’Ivoire and Ghana, geo-mapping over 200,000 hectares and integrating risk screening via Global Forest Watch APIs. Unlike past sustainability reporting, which was often annual and narrative-based, Mondelēz now requires continuous monitoring and dynamic alerts across its supplier base.

The company has also added blockchain-enabled traceability layers to cocoa beans entering its European processing hubs. Each batch now carries a digital passport—encoding location, farmer ID, cooperative affiliation, and risk flags. These technologies have been piloted with partners including SAP and IDH’s Farmfit platform.

Importantly, Mondelēz is also shifting volumes toward suppliers with robust climate-smart sourcing architecture. In Q1 2025, the company signed multi-origin sourcing contracts with Cargill and Barry Callebaut, citing “integrated climate traceability” as a key selection criterion. These strategic realignments reflect growing institutional consensus: sustainability is no longer just a marketing vector—it’s a compliance differentiator.

What Is the Institutional Sentiment on Cocoa Procurement Under the EUDR?

Early market signals point to bifurcation in the cocoa trade. Institutional investors are favoring firms with high digital traceability readiness and verified scope 3 carbon accounting capabilities. Commodity traders that relied on bulk aggregation, opaque chains of custody, and low-compliance sourcing are seeing EU-bound contracts dwindle.

Analyst briefings from Rabobank and BNP Paribas Exane suggest that EUDR compliance will become a de facto cost of access for EU chocolate markets, reshaping procurement flows over the next 12–18 months. Industry players capable of digitizing farm data and executing verified traceability protocols stand to benefit from premium pricing and preferential volume allocations.

This dynamic is already visible in Q2 procurement flows. Nestlé has trimmed exposure to smaller cooperatives with uncertain compliance readiness in eastern Ghana, reallocating contracts to verified clusters in Côte d’Ivoire’s Daloa region. Mondelēz, meanwhile, has suspended engagement with two third-party aggregators in the Sassandra Basin, citing audit gaps.

How Does Cargill’s Cocoa Infrastructure Give It a Strategic Edge?

Cargill, while not a listed entity, has rapidly become a central node in this reshaped cocoa ecosystem. Its recent overhaul—spanning solar-powered plants in Ghana, ISO tank systems, electric barge transport in the Netherlands, and a 31,000-ton emissions cut at Amsterdam facilities—offers EU chocolate makers a supplier that meets both decarbonization and traceability mandates.

Perhaps more crucially, Cargill’s full-chain visibility—from farm inputs to EU warehouse logistics—simplifies compliance paperwork for importers now subject to steep due diligence penalties. In June 2025, Cargill launched a compliance-as-a-service pilot with EU clients, bundling traceability data, origin risk scores, and EUDR declarations in a single verified digital dossier.

This positions the company not just as a cocoa processor, but as a compliance partner—providing a buffer against legal and reputational exposure for high-profile buyers like Nestlé and Mondelēz.

What Challenges Remain as Cocoa Sourcing Enters a New Regulatory Era?

Despite digital gains, systemic barriers remain. In Ghana and Côte d’Ivoire, large portions of cocoa remain sourced via informal channels or low-infrastructure cooperatives that lack mapping capabilities. Farmplot demarcation is often imprecise, and national land tenure systems are inconsistent. Enforcement in these jurisdictions could create bottlenecks, especially as the EU ramps up post-market surveillance.

Moreover, smallholder exclusion is an emerging concern. Compliance costs—such as geotagging, mobile device provisioning, and certification audits—may inadvertently push non-digitized farmers out of premium supply chains, reducing income and equity. NGOs and development lenders are advocating for financial support to ensure that traceability mandates do not reinforce systemic marginalization.

For companies like Nestlé and Mondelēz, the challenge will be balancing rigorous compliance with inclusive sourcing models—ensuring their supply chains are not just legal, but equitable.

What Comes Next for Cocoa Giants Under the EU’s Expanding ESG Enforcement?

The EUDR is widely seen as a template for future commodity regulations. The European Commission is already examining adjacent policies covering human rights due diligence, biodiversity-linked procurement, and emissions-linked import levies.

In that context, Nestlé and Mondelēz’s cocoa transformations are early signals of how global food giants will restructure supply chains in the 2030 climate economy. Analysts expect further vertical integration, supplier consolidation, and digital ESG harmonization across cocoa, coffee, and palm oil portfolios.

For now, the EU deforestation law has triggered a visible inflection: sustainability has shifted from corporate social responsibility to enforceable law. In the world of chocolate, origin now means coordinates—not just country of origin but hectare of harvest. And compliance is not a certificate, but a digital contract—with traceability, transparency, and trust encoded at every step.