Deforestation is a global challenge intricately linked to many of the goods we consume daily. In response, the European Union has established the European Union Deforestation Regulation (EUDR) to mitigate the impact of deforestation associated with products in its market. Compliance with this regulation necessitates robust due diligence processes, enabling companies to contribute to deforestation-free supply chains.
Setting the scene
The European Union Deforestation Regulation (EUDR) is a transformative legislative initiative aimed at mitigating deforestation and forest degradation attributable to EU consumption patterns. By instituting rigorous requirements for companies importing commodities linked to deforestation, the EUDR aims to ensure that products entering the EU market do not contribute to global forest destruction. This regulation aligns with the EU’s overarching commitment to environmental sustainability and climate change mitigation.
Background to the Regulation
Deforestation and forest degradation are major drivers of global greenhouse gas emissions and biodiversity loss. The EU, as a significant market for commodities such as soy, palm oil, coffee, cocoa, and beef, has a substantial impact on global deforestation. Recognising this, the EU introduced EUDR in 2023 to address these critical environmental issues. The regulation mandates that companies must demonstrate their supply chains are deforestation-free to access the EU market.
Key Considerations
Scope and Coverage
EUDR encompasses a broad array of commodities including palm oil, soy, coffee, cocoa, timber, and cattle products, as well as derivative products such as chocolate, leather, and furniture. Entities involved in the production, import, or trade of these commodities within the EU must ensure compliance with the regulation.
Due Diligence Requirements
To comply, companies must undertake comprehensive due diligence to guarantee their supply chains are deforestation-free. This process involves:
- Traceability: Implementing traceability systems to monitor the origin of commodities down to the specific plot of land where they were cultivated.
- Risk Assessment: Conducting risk assessments to identify potential deforestation risks within supply chains. Read more details about our approach to EUDR Risk Assessments here.
- Mitigation Measures: Instituting mitigation measures to address identified risks, including supplier engagement, independent audits, and satellite monitoring.
Compliance and Penalties
Non-compliance with the EUDR can result in significant penalties, including fines, product seizures, and market access restrictions. Companies must maintain detailed records and provide evidence of compliance upon request from regulatory authorities.
Implementing the Regulation
Leveraging our extensive experience with clients, we have developed a structured approach to meet EUDR compliance. The five key stages of our approach are outlined below.
Five Key Stages
1. Establishing a Compliance Framework
Businesses should initiate the process by developing a robust compliance framework. This includes designating a compliance officer or team, delineating clear policies and procedures, and integrating these into the company’s overall sustainability strategy.
2. Supply Chain Mapping
Mapping the supply chain is a pivotal step. Companies must identify all suppliers and sub-suppliers involved in the production of regulated commodities, extending to the farm level to ensure full traceability.
3. Implementing Technology Solutions
The adoption of technology is essential for effective compliance. Tools such as blockchain, satellite imaging, and geographic information systems (GIS) can facilitate the tracking of commodities and verification of their origins. These technologies enhance transparency and provide robust data for due diligence processes.
4. Engaging Suppliers
Engaging suppliers is critical to ensuring their understanding and adherence to EUDR requirements. This may involve training programs, capacity-building initiatives, and continuous communication. Establishing long-term partnerships with suppliers can foster mutual trust and collaboration.
5. Continuous Monitoring and Improvement
Compliance with the EUDR is an ongoing process. Businesses should continuously monitor their supply chains and refine their due diligence practices in response to new information or evolving circumstances. Regular audits and reviews can identify areas for improvement and ensure sustained compliance.
EUDR represents a significant move towards more sustainable and responsible supply chains for companies operating within the EU. By implementing robust due diligence processes and leveraging advanced technologies, businesses can not only achieve compliance but also contribute to global efforts to combat deforestation and climate change. Ensuring adherence to the EUDR will require substantial effort and commitment, but it also offers businesses the opportunity to enhance their sustainability credentials and build more resilient supply chains.
How Jordisk can Help
Integrating EUDR into the business can be a challenge. Our team of experts work with companies across the world to assess, plan and implement effective due diligence processes to ensure compliance.
Our clients range from large-scale EU importers managing extensive supplier networks to small enterprises within their supply chains. Leveraging our deep expertise, we offer strategic guidance to help you comply with EUDR efficiently and effectively.
Our pragmatic approach utilises tools to streamline your implementation process. Our team of specialists will work closely with you to clarify your obligations, develop the necessary processes and data frameworks.
Let us help you build a resilient and compliant EUDR strategy, get in touch to learn more.
