In today’s globalised markets, traceability has emerged as more than just a technical requirement. It is a strategic tool that can help businesses future-proof their operations, strengthen risk management, and build consumer trust. As sustainability legislation continues to tighten across the EU, traceability is also no longer a matter of if, but how companies will implement it.
That’s why we have prepared this dedicated piece to explore what traceability really means, its role within EU sustainability law, and why adopting a holistic strategy can give businesses a lasting competitive edge.
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Traceability vs Transparency: Understanding the Difference
Let’s first dig into the definitions. Traceability and transparency are two terms often used interchangeably, but they represent distinct concepts that work hand in hand. According to ISO 9000:2015, traceability is:
“The ability to trace the history, application, location or source(s) of a material or product throughout the supply chain.”
In essence, it’s about knowing where something came from and who handled it at every stage of the supply chain.
Transparency, on the other hand, as defined by the UNDP (2025), is:
“A key principle underlying accountability, referring to a process by which reliable, timely information about existing conditions, decisions and actions relating to the activities of the organisation is made accessible, visible and understandable.”
For an organisation, transparency is about communicating with customers, public authorities, and stakeholders on its products and processes. Traceability is often a necessary tool that provides factual data for transparency. Without traceability, transparency is often impossible.
The Context of Traceability in EU Sustainability Legislation
Traceability requirements are embedded in, or at least connected to, nearly all EU sustainability legislation. From the labelling provisions of the Plastic Packaging and Waste Regulation (PPWR) to the Omnibus Simplification Package, traceability acts as the backbone that supports transparency, sustainability reporting, and regulatory compliance.
While in most cases traceability is not a mandatory legal requirement, it is crucial for demonstrating compliance. There are, however, notable exceptions. For example, the EU Deforestation Regulation (EUDR) imposes strict traceability obligations on businesses placing certain commodities on the EU market. Similarly, the forthcoming Digital Product Passport (DPP) initiative under the EU Ecodesign for Sustainable Products Regulation (ESPR) will require detailed traceability data to accompany a wide range of goods.
For all other policies, traceability is not a standalone compliance requirement. Instead, it is an internal organisational workstream that supports other compliance workstreams, enabling companies to meet sustainability commitments, verify supplier claims, and respond effectively to regulatory scrutiny.
The Value of a Holistic Traceability Strategy
The need for a traceability strategy goes beyond mere legislative compliance.When faced with increasing regulatory complexity, it can be tempting for businesses to focus only on the traceability requirements of the specific laws that currently apply to them. A coherent traceability strategy must also take into account international conventions and industry standards.
However, a fully fledged strategy goes beyond that point. A unified traceability framework also helps companies manage risk more effectively by enabling them to identify and address issues across their supply chains before they escalate. It strengthens sustainability communication efforts, supports green marketing claims, and facilitates relationships with stakeholders — from regulators and consumers to investors and business partners.
In short, a holistic traceability approach is not just about compliance, it’s an enabler of resilience and competitiveness. That makes it a strategic move even for companies which are currently not under the scope of mandatory traceability requirements.
Understanding the Data Demands
Building an effective traceability system requires clarity about the types of data that need to be collected, managed and shared. EU sustainability legislation increasingly points to the need for businesses to have visibility over multiple data layers. These typically include:
- Company data: Information about your company, its processes, and its impacts.
- Product data: Details of the product’s composition, origin, performance, and environmental attributes.
- Shipment data: Records of when, where, and how goods move between actors in the supply chain.
- Order data: Documentation of transactions, including purchase orders and invoices.
These data layers work together to form the foundation of a robust traceability system. To help visualise how these data types align with various pieces of EU legislation, we have prepared an infographic below that maps these connections.
This will give your business a clearer picture of what is required and where to focus efforts.
Essential Steps for a Robust Traceability Strategy
Strengthening your traceability capabilities will require clear priorities, smart planning, and action across multiple fronts. Here are the essential steps recommended by our experts.
Define Objectives and Scope
The first step for any business is to decide what it wants its traceability and transparency strategy to achieve. Is the goal only to ensure compliance or also to build reputation, strengthen sustainability communications, and support voluntary standards? The answer will determine the scope of your strategy and shape the data architecture you need to build.
Prepare for the Future
EU sustainability legislation is dynamic. Companies should anticipate the regulations that are likely to affect them in the coming years and monitor the publication of official guidance on data requirements and collection methods. Forward-thinking businesses will map their exposure today and make incremental investments to avoid costly overhauls later.
Anticipate Uncertainty
Uncertainty is inherent in the current regulatory environment. That is why it’s crucial to establish modern, adaptable processes and IT systems that enable data collection both internally and across supply chains – this to ensure that when the exact data requirements are known, your business is ready. Success depends on cross-departmental collaboration, so businesses must break down internal silos and engage all their teams in the traceability effort.
Engage with Policymakers
Many traceability-related requirements, such as those under the EU Ecodesign for Sustainable Products Regulation and the Digital Product Passport, are still under development. By engaging early with policymakers, businesses can help ensure that these requirements are realistic, proportionate, and minimise unnecessary administrative burden.
The Bottom Line
Traceability is no longer an optional extra for businesses committed to long-term success in the EU market. It supports transparency, ensures compliance, and builds the resilience needed to thrive in an increasingly complex regulatory environment. But to deliver real value, traceability must be embedded into the core of business strategy, not treated as an afterthought.
If your organisation is ready to strengthen its traceability strategy, get in touch with our team. Our consultants will offer you expert guidance on designing and implementing strategies that meet today’s requirements and prepare your business for tomorrow’s challenges.