In the fast-paced realm of environmental regulations, the European Union Deforestation Regulation (EUDR) has emerged as a game-changer for businesses aiming to adopt sustainable practices. Keeping abreast of the most recent developments is crucial for companies navigating the intricacies of compliance. EUDR sets stringent guidelines, compelling companies to ensure their products avoid contributing to deforestation.
The EU Deforestation Regulation (EUDR) became effective on June 29, 2023, with a compliance deadline for businesses set on December 30, 2024 (European Commission, 2023). Targeting seven commodities—palm oil, coffee, cocoa, rubber, timber, cattle, soy —EUDR aims to avoid importing and selling products linked to deforestation. This proactive measure seeks to foster sustainability and mitigate the detrimental impact of deforestation on ecosystems, climate, and human rights. Businesses must align with EUDR standards by the stipulated deadline to operate within the EU. Compliance involves demonstrating that products entering the EU market are free from deforestation ties. Non-compliance carries consequences such as penalties, reputational damage, and potential market setbacks.
How can businesses navigate this complex regulatory landscape, ensuring that the products they import are deforestation-free? Let's delve into the top 6 things businesses need to know to stay ahead.
#1 Supply Chain Transparency
Businesses operating in the European Union should anticipate heightened demands for transparency in their supply chains. The EUDR may necessitate thorough documentation and disclosure regarding the origin of key commodities linked to deforestation, requiring companies to trace and disclose sourcing information for related products.
#2 Due Diligence Obligations
The EUDR sets stringent due diligence requirements on businesses, mandating comprehensive risk assessments to identify and mitigate deforestation risks throughout their supply chains. Businesses must implement effective due diligence processes to assess and manage environmental, social, and governance risks associated with deforestation. Operators and traders must demonstrate that their products are free from deforestation, meaning they were produced on land that remained untouched by deforestation after December 31, 2020. Additionally, they need to ensure that the products are legal and comply with all relevant and applicable laws in force in the country of production.
Companies must gather accurate geographical data regarding the farmland where the commodities they procure are cultivated. Member States are obligated to ensure that failure to comply with these rules results in both effective and discouraging penalties. Furthermore, the due diligence system involves three parts.
EUDR Data Collection Information Gathering – Assembling information regarding your product's supply chain, encompassing geolocation and the timeframe of primary production.
EUDR Risk Assessment & Evaluation – Analyzing the information gathered to assess the potential risks of deforestation, forest degradation, and product-related illegality.
EUDR Risk Mitigation – Implementation of action measures to diminish significant risks to negligible levels. These actions may involve seeking additional information, conducting independent surveys, capacity building, training & coaching, certifications preparations.
#3 Sustainable Sourcing Promotion
The regulation may encourage or mandate businesses to prioritize sustainable sourcing practices. The regulations may advocate for businesses to prioritize suppliers that adhere to certified sustainability standards, ensuring that the sourcing practices do not contribute to deforestation or other environmentally harmful activities.
Certification programs endorsed by recognized environmental organizations or governmental bodies may be part of the criteria for determining the sustainability of sourcing practices that are responsible and ethical production methods. Align to these needs, as the trusted global service provider for businesses to comply with EUDR requirements, our boots-on-the-ground team supports businesses with supply chain mapping, ensures transactional traceability, and delivers risk mitigation to smallholders.
#4 Monitoring and Reporting Requirements
The EUDR may introduce monitoring and reporting obligations for businesses to regularly assess and report on their progress in addressing deforestation risks. Implementing robust monitoring systems and disclosing relevant information in annual reports may become standard practice for compliance. KoltiTrace, our Traceability platform, automates the creation of due diligence statements, risk assessments, and farmer lists generated from collected data, supporting evidence submission for EUDR Compliance.
#5 Technology Integration
Embracing technological solutions, such as satellite imagery and traceability tools, may enhance visibility and accountability in supply chains. Adopting such technologies could be instrumental in meeting the traceability and transparency requirements set forth by the EUDR. Through the KoltiTrace platform, we facilitate businesses with the EUDR Compliance Dashboard, offering them the ability to monitor comprehensive evidence of assessments. This features also automates the flagging of compliant producers and plots according to EUDR requirements, incorporating a downloadable access feature.
#6 Legal Compliance and Consequences:
Companies operating within the EU should be aware of the legal obligations outlined in the EUDR. Non-compliance may lead to severe consequences, including financial penalties and reputational damage. Understanding and adhering to the regulation is crucial to avoid legal repercussions. Through KoltiTrace, we provide information regarding compliant and non-compliant farms, triggering a notification alert in the event of identifying a non-compliant farm.
Empower your business sustainably, navigating EUDR compliance seamlessly with Us! Your Trusted Global Partner for EUDR Compliance: Empowering Businesses Worldwide. Talk to our Expert Now!
green-business.ec.europa.eu. (2020). Implementation of the EU Deforestation Regulation. Retrieved from green-business.ec.europa.eu: https://green-business.ec.europa.eu/implementation-eu-deforestation-regulation_en#:~:text=The%20new%20EU%20law%20on,apply%20on%2030%20December%202024.
Writer: Rihlah Nahdhiyah Bilkis, Social Media at Koltiva
Editor: Boby Hermawan Arifin, Head of Digital Marketing at Koltiva
Rihlah Nahdhiyah Bilkis, a skilled writer with a social media and copywriting background, excelled as a social media specialist at Koltiva, crafting captivating articles on products and producers stories for the company's blog, showcasing her unique ability to blend technical details with human narratives. Her strategic approach to social media has been instrumental in connecting with the audience, making her a promising talent in content creation.