The European Union’s Deforestation Regulation (EUDR), set to come into effect at the end of 2025, mandates that companies importing specific commodities into the EU must trace the origins of these products throughout their supply chains. The regulation aims to ensure that only deforestation-free products are imported, addressing the EU's broader environmental objectives and commitment to combating climate change.
The EUDR targets commodities such as soy, coffee, palm oil, cocoa, timber, rubber, and beef—products that have historically been linked to deforestation. As per the regulation, products associated with deforestation or irregular land conversion after December 31, 2020, will be barred from entering the EU market. This significant legislative change requires businesses to engage in complex logistical arrangements, tackling challenges related to accurate reporting and compliance with local laws, as well as ensuring that smallholder farmers continue to participate in global supply chains.
The implementation of the EUDR has led many businesses to explore technological solutions to help meet compliance requirements ahead of the deadline. Originally scheduled for implementation this month, the regulation's introduction was postponed by a year as many businesses reported being unprepared. In an effort to manage this challenge, several technology companies are providing tools to aid firms in demonstrating EUDR compliance, employing innovations such as blockchain, software development, traceability platforms, and satellite data.
Experts highlight that while technology plays a crucial role, it is not a standalone solution. Vivian Ribeiro, senior data scientist and spatial intelligence lead at Meridia, explained that a blend of technological tools, solid partnerships, and human collaboration is vital for achieving compliance. Ribeiro noted the complexity of accurately mapping farm boundaries, which is essential for assessing deforestation risks. Digital mapping tools can encounter issues such as boundary overlaps or information gaps, particularly in remote areas. Meridia’s Verify platform attempts to resolve these challenges by integrating both public and private data sources to produce detailed farm maps.
Local environmental law compliance is also integral to EUDR adherence, as highlighted by Ribeiro. The Verify platform helps identify potential overlaps with protected areas and Indigenous lands, which could signal risks for companies aiming to maintain legal integrity in their supply chains.
Niels Wielaard, CEO of Satelligence, emphasised the importance of clear satellite data in accurately identifying land use. He pointed out that while advanced satellite imagery and AI algorithms are instrumental in distinguishing agricultural land from forested areas, success hinges on combining satellite data with ground-level insights.
Fraudulent claims about compliance remain a notable challenge, especially when relying on self-reported data. Wielaard elaborated that verifying the actual impact of corporate claims on deforestation can only realistically be achieved through satellite monitoring.
Global Traceability has developed RADIX Tree, which combines technology with human input to enhance supply chain transparency. Founder and CEO Ulrich Heindl discussed the effectiveness of merging automation with manual validation to ensure data accuracy, as fully automated processes may not be able to detect all potential fraud.
As businesses work to comply with the EUDR, there is concern for smallholders, particularly in industries such as coffee and palm oil, who may struggle to demonstrate compliance due to limited access to technology. The EUDR poses the risk of excluding these smallholders from global markets if adequate accommodations and support are not provided. Heindl explained that obtaining information directly from smallholders can be challenging, prompting the use of a top-down data-gathering approach wherein larger companies aggregate data on behalf of smaller producers.
Despite these difficulties, Ribeiro stressed that engaging even small producers is crucial, as exclusion would not benefit the overall business ecosystem or agriculture more broadly. She underscored the importance of providing support that enables smallholders to participate in supply chains while ensuring adherence to environmental regulations.
The preparation for the EUDR is ongoing, with many companies beginning to position themselves strategically ahead of the 2025 deadline. For instance, cocoa companies have collaborated on a shared methodology for assessing deforestation risks using satellite imagery. While several firms have already taken steps to test their compliance processes, experts indicate that addressing issues such as inaccurate mapping and legal discrepancies could prove time-consuming.
Ultimately, successful compliance with the EUDR appears to rely on a combination of technological innovation and robust collaboration across various stakeholders within the supply chain. “Tech is an enabler, a tool,” stated Wielaard, acknowledging that operational and interpersonal challenges are often more significant than technical hurdles alone. The upcoming regulatory changes underpin a critical shift in how businesses manage their environmental responsibilities in the context of global supply chains.
Source: Noah Wire Services