The European Union (EU) has successfully agreed upon the European Union Deforestation Regulation (EUDR), aimed at reducing the EU’s contribution to global deforestation. However, the most difficult part lies ahead as companies face the task of implementing the new obligations within 18 months of its entry into force.
The timeline is tight, considering the substantial changes required in the organization of bulk commodities. Companies are now focused on finding solutions to meet various challenging provisions, particularly the need for traceability and plot data in segregated flows. Unfortunately, a lack of clarity regarding the framework and requirements is causing delays in necessary organizational changes for timely implementation. There is a fundamental underestimation of the time needed for these changes to reach all levels of the supply chains. Urgent guidance from the Commission and Member States is necessary to clarify expectations.
Another concern is that the law could exclude smallholders from EU supply chains. To address this issue, all parties involved should immediately collaborate to minimize exclusion. The Commission, Member States, and governments of producing countries must support this effort to be effective.
While the EU’s ambition to tackle global deforestation is commendable, it should go beyond establishing deforestation-free supply chains within the EU. To actively support a reduction in global deforestation, stakeholders should seize the momentum of the EUDR as an opportunity to address the root causes of deforestation. Without such action, the regulation could result in a mere redirection of supply streams, with deforestation-free products circulating within the EU while products linked to deforestation find their way to non-EU markets.
To ensure the successful implementation of the EUDR, the following key recommendations are proposed:
Guidance and legal clarity for proper implementation:
Companies need to prepare for compliance with the EUDR, but progress is hindered by a lack of clarity on key provisions. The Commission, Member States, and companies should collaborate to clarify and facilitate the effective implementation of the regulation.
There are numerous practical implementation questions in the affected commodity sectors, particularly concerning geolocation and polygon information requirements. The immense volumes of traceability data and the sensitivity of sharing such information pose challenges related to data privacy, commercial sensitivities, and potential breaches of anti-competition laws. Therefore, it is crucial that the Commission promptly provides answers on how to share required information in a restricted and/or anonymized manner when necessary.
Additionally, companies and competent authorities should cooperate to ensure compliance with the regulation’s goals and requirements while minimizing unnecessary disruptions to trade and supply chain flows.
Strong dialogue and partnerships between the EU and producing countries:
Establishing meaningful partnerships between the EU and producing countries is vital to gain their support and create an enabling environment for compliance, thereby avoiding the exclusion of smallholders from EU supply chains in the long run.
These partnerships should urgently address the main obstacles that prevent smallholders from participating in EU supply chains, including:
Obtaining geolocation and plot data of millions of smallholders indirectly supplying mills through collectors/aggregators. Middlemen often refuse to share information about the smallholders they buy from, fearing bypassing. Without their collaboration, smallholders supplying through them will inevitably be excluded from EU supply chains.
Acquiring and maintaining reliable and updated traceability data that matches land ownership titles. In the absence of properly regulated land tenure and inadequate national farm registers, sourcing from farmers whose ownership rights and changes are not officially registered poses risks to operators. Operators cannot comply with the EU’s requirements if such official information is unavailable.
Overcoming data sharing impediments in producing countries. Some countries consider land ownership data sensitive and prohibit its sharing. Companies must respect the laws and sensitivities of the countries they source from. The EU should engage in diplomatic efforts to find mutually acceptable solutions.
Exploring solutions beyond using phones to provide GPS coordinates. Phone-based tools may not work in remote areas with limited connectivity, and many smallholders lack the knowledge to collect their polygon coordinates. Furthermore, relying solely on phones does not guarantee the reliability of the data or compliance with the EUDR without proper land titles.
Supporting the role of national certification schemes, as they are well-positioned to facilitate compliance with the EUDR and promote smallholder inclusion. These schemes cover broader sustainability aspects beyond the requirements of the EUDR.
To ensure the EU’s Deforestation Regulation becomes a success story, all stakeholders, including the EU, Member States, producing country governments, the private sector, and non-governmental organizations, must prioritize the task of implementation and begin working together immediately.
Source – euractiv
