The EU Deforestation Regulation and Its Impact on Your Business
Sustainability expert at Source Intelligence, Charles Getter, joined LiveEO for a video series highlighting different voices and perspectives about the European Union Deforestation Regulation (EUDR). LiveEO, an AI-driven satellite monitoring solutions provider, asked Charles about the EUDR’s impact on companies and their supply chains and how Source Intelligence’s deforestation software helps streamline compliance. Watch the videos or read the full interview below.
What impact will the EUDR have on supply chains?
The impact will be huge. People might already be familiar with the EU Timber Regulation, which was repealed by the EUDR earlier this year in June. Under the EU Timber Regulation, companies trading timber on the EU market were required to ensure that the timber was legally sourced and did not contribute to deforestation.
It’s now understood that agricultural expansion to produce certain commodities is responsible for far more deforestation than logging for timber, so the scope of commodities has expanded massively. Under the EUDR, companies are responsible for legally sourcing seven commodities:
- Palm Oil
What challenges will companies face with EUDR compliance?
One challenge that companies will face regarding EUDR compliance is being able to conduct due diligence. The new standards set by the EUDR require not only legality but also elements of sustainability, including zero deforestation. It’s extremely hard to meet those requirements when thousands of farms produce these commodities; it’s difficult to prove that zero deforestation occurred in the production process. Another challenge companies will encounter is tracing massive amounts of produce and commodities from different points across the supply chain.
That’s where software comes in. At Source Intelligence, we aid traceability and due diligence by utilizing satellite imagery and automation. We're able to obtain geocoordinates for various plots of land and perform checks using satellite imagery platforms. Our software can be used to gather various information up and down the supply chain, including information on certification and compliance with domestic legislation, and perform automated assessments based on that information.
Again, another complexity is that a lot of these commodities are sourced from various places across the world, and what defines legal compliance is, therefore, different. So, our software is able to make comparisons against legislation from country to country. And it's that information that is crucial to providing due diligence statements.
What are the unforeseen impacts of the EUDR?
I think the EUDR could be quite daunting to various traders within the EU market due to the expanded scope of the regulation. Several companies are confused about which commodities are covered under the regulation, especially when it comes to derived products.
For example, supermarkets sell products containing palm oil – which is in absolutely everything – and, without proper guidance, a supermarket could consider its entire stock non-compliant without a due diligence statement. However, palm oil only falls under the scope of the regulation in its raw form, which means products containing palm oil are not within the scope. On the other hand, chocolate products, which contain cocoa, are within the scope. That inconsistency causes confusion.
What advice would you give to companies affected by the EUDR?
- Utilize deforestation compliance software to manage due diligence requirements.
- Read Annex 1 of the EUDR to understand exactly which commodities and their derivatives are in scope and which are not.
- Take advantage of standards and certifications to help achieve EUDR compliance, including Forest Stewardship Council (FSC) Timber and the Roundtable on Sustainable Palm Oil (RSPO).
Simplify EUDR compliance with Source Intelligence
Our comprehensive deforestation solution simplifies EUDR compliance and helps your business meet the reporting requirements of the EUDR and other global deforestation regulations, such as the United States Lacey Act. Our powerful compliance software facilitates product tracing, automated risk assessments, and document collection and management. When you partner with Source Intelligence, your business will benefit from:
- Reduced internal resource burdens
- Increased efficiency with centralized data
- Mitigated supply chain risk
- Broadened supply chain visibility
Explore our deforestation program or connect with us to schedule a demo tailored to your individual company’s needs.