EUDR Compliance: The EU's Regulation for Deforestation-Free Products
Deforestation is one of the biggest environmental challenges facing the world today, and it is a serious threat to our planet's ecosystems and climate. The European Union (EU) is taking proactive measures to tackle the growing problem of deforestation. One such initiative is the EU's regulation for deforestation-free products, known as EUDR compliance. EUDR compliance is a set of guidelines and standards that companies must adhere to in order to ensure their products are not contributing to deforestation. This article will provide an overview of EUDR compliance and explore how technology is used to combat deforestation and achieve compliance.
EUDR Compliance Overview: What it is and how it affects your business
EUDR compliance is a regulation that prohibits the import and sale of products in the EU which have contributed to deforestation. This regulation aims to encourage sustainable practices and reduce the impact of deforestation on ecosystems, climate change, and human rights. On June 29, 2023 the EUDR entered into force, the compliance deadline is December 2024.
If your company wants to do business in the EU, you must comply with EUDR regulations. This means that your brand must demonstrate that its products do not contribute to deforestation when they enter the EU market. Failure to do so could result in fines, damage to your company's reputation, and loss of market share.
Deforestation-Free Supply Chain Management
What is the EU Deforestation-Free Regulation?
The EU Deforestation-Free Regulation (EUDR) is a set of rules and regulations established to promote the production and consumption of deforestation-free commodities within the EU market. The regulation requires companies operating within the EU to comply with strict standards and guidelines to ensure their products are produced using sustainable and environmentally-friendly practices.
Why was the regulation created?
The EU Deforestation-Free Regulation was created in response to the increasing problem of deforestation and its impact on the environment and local communities. Deforestation is a major contributor to climate change and has a devastating impact on our planet's biodiversity. The EUDR was created to combat this problem by promoting sustainable and ethical practices among businesses in the EU market.
Which products does it cover?
The EU Deforestation-Free Regulation covers a range of commodities that are commonly associated with deforestation, including palm oil, coffee, wood, soy, rubber, beef, and cocoa amongst other product derivates. Any company operating within the EU that produces or sells these products must comply with the EUDR to avoid costly fines and reputational damage.
Why is EUDR Compliance important?
Deforestation significantly impacts the environment, contributing to climate change, soil erosion, and biodiversity loss. Trees are important oxygen providers and help regulate the Earth's climate; their removal reduces these benefits. Additionally, deforestation has a devastating effect on local communities and indigenous peoples. The removal of trees often destroys their homes and livelihoods. EUDR compliance is important because it encourages businesses to take a more proactive approach to protecting the environment and the communities they operate in.
3 Critical Steps for Ensuring EUDR Compliance
Supplier due diligence process
One key way in which your company can meet EUDR compliance is through a thorough supplier due diligence process. This involves conducting a detailed analysis of operations at raw material sourcing to identify any potential areas of non-compliance. Additionally, it is crucial to verify the chain of custody from source to shelf to ensure your compliant commodities are not mixed with non-compliant commodities. By doing so, your company can prove that your products are produced and sold in a way that is consistent with the EUDR regulations.
Use of technology to gather source-level data
Your company can implement a reliable traceability software for collecting source-level data to stay compliant with the EUDR. Select a blockchain-based traceability platform with the proficiency in capturing geo-located, primary data at the farm or plantation level that can be connected to the asset and the transaction. Doing so will enable your company to collect verifiable data tied to your final products, simplify the compliance process, and ensure accountability and transparency in your supply chain.
Monitoring and reporting deforestation status
Finally, your company can ensure EUDR compliance by monitoring and reporting your deforestation status. This involves collecting real-time data on the environmental impact of your production from the origin and creating easily accessible reports for internal and external audits. Staying up-to-date and proactive will be essential to keeping your supply chain auditable and compliant.
The Business Benefits of EUDR Compliance
Improving sustainability and traceability
One of the main benefits of EUDR compliance is improved sustainability and traceability in your supply chain. By adhering to the regulations and standards mandated in the EUDR, your company can ensure it operates in a way that is consistent with environmentally-friendly and socially-responsible practices. This helps to improve the overall sustainability and traceability of your supply chain, enabling consumers to make more responsible purchases.
Meeting conscious consumer demands
Another benefit of EUDR compliance is that it enables your company to meet the growing consumer demand for ethical and environmentally-friendly products. With more and more consumers becoming concerned about the impact of their purchasing decisions on the planet, EUDR compliance can help attract and retain customers looking for products that are produced and sold in a way that is consistent with their values.
Securing your supply
To achieve compliance with the EUDR, your company will need to extend the visibility of your operations down to the source/farm level. This level of visibility enables you to have greater control of your supply chain and mitigate risks. Through data-driven insights, you can optimize supply chain operations, smartly forecast, and secure your supply.
Reducing reputational and legal risks
Finally, EUDR compliance can help to reduce reputational and legal risks for operating within the EU market. By adhering to strict regulations and standards, your company can avoid negative publicity and litigation related to environmental and social impact, protecting your brand reputation and ensuring compliance with EU legislation.
How to Select the Right EUDR Compliance Traceability Solution
A range of traceability partners and software is available for companies wanting to achieve EUDR compliance. But beware, not all traceability solutions are created equal. The five criteria below will guide you in selecting the right traceability solution to meet EUDR compliance:
Geo-located Plot of Land
Many companies have visibility of the initial tiers of their supply chains (i.e., the manufacturer or supplier of your products or semi-final products). To meet EUDR compliance, your company will need visibility down to the farm or plantation where your commodities originate. For example, you will need to tie the deforestation-free verified (with satellite imagery or public cadasters) plots of land where your commodities originate to the source transactions for proof of compliance.
Chain of custody
Any good audit-proof traceability solution will be able to maintain the chain of custody of your product, from the plot of land to distribution and every step in between. Tracking and tracing your product’s journey from the origin creates a digitized audit trail of events and transactions to report its environmental footprint accurately. By preserving unaggregated source data tied to your final product, you can confidently demonstrate deforestation-free at the farm or plantation level.
Spot audits won't cut it for you anymore. You need real-time tracking. It's essential to meet EUDR compliance and stay up-to-date on supply chain operations. Ensure your traceability solution captures real-time data as materials and ingredients move throughout your supply chain. Doing so will keep your data accurate for auditors.
In order for your company to achieve audit-proof traceability, tracking both primary and secondary data is crucial. Primary data is the source-level data that a company collects, while secondary data is obtained from partners or aggregators. Many existing traceability frameworks only track secondary data, which is inadequate for ensuring data integrity. Implementing a traceability solution that accurately tracks primary and secondary data is imperative to avoid unverifiable claims.
Your traceability partner must seamlessly integrate with any ERP, inventory management, and other legacy systems you use to manage your supply chain, procurement, compliance, and sustainability data. System compatibility will help you streamline your operations and reduce the risk of errors and inconsistencies.
EUDR Compliance Conclusion
- The European Union's Deforestation-Free Regulation is a groundbreaking initiative that is helping to combat the problem of deforestation and promote sustainable and ethical practices among the businesses that operate within the EU market. With the help of technology solutions such as BanQu’s cutting-edge, blockchain-based platform, your company can ensure that it meets EUDR compliance and does its part to protect people and the planet.
- At BanQu, we're proud of our advanced, audit-proof supply chain traceability software that enables your global enterprise to meet compliance demands, secure its supply, and source sustainably. Our blockchain-based platform captures verifiable data from the plot of land to the end product and every step in between, so you can confidently meet EUDR compliance. Kickstart your deforestation-free journey with a complimentary EUDR risk assessment today!