What is the EU Deforestation Regulation?
On June 29, 2023, the European Union’s new deforestation regulation (EUDR) entered into force. The EUDR ensures that seven commodity products that are major drivers of deforestation — soy, beef, palm oil, wood, cocoa, coffee, and rubber — will no longer be sold in the EU if sourced from areas affected by deforestation or forest degradation practices. These areas include parts of Brazil, Ecuador, Indonesia, and Zambia.
This regulation on deforestation-free products repeals the EU Timber Regulation, which did not go as far to regulate illegal timber. As of June 2023, operators and traders will have 18 months to implement the new rules. Micro and small enterprises will have a longer adaptation period.
Why is the EUDR Important?
The EU lists their goals for the EUDR as follows:
- Avoid the listed products Europeans buy, use and consume contribute to deforestation and forest degradation in the EU and globally
- reduce carbon emissions caused by EU consumption and production of the relevant commodities by at least 32 million metric tonnes a year
- address all deforestation driven by agricultural expansion to produce the commodities in the scope of the regulation, as well as forest degradation
By promoting the use of ‘deforestation-free’ products and reducing the EU’s impact on global deforestation and forest degradation, the new regulation is expected to bring down greenhouse gas emissions and biodiversity loss.
Agricultural production is by far the main driver of global deforestation, accounting for 80% of total forest conversion. The growing demand for agricultural commodities internationally continues to drive agricultural land conversion. The EU alone is responsible for importing products that account for approximately 13-16% of deforestation associated with global trade, resulting in 203,000 hectares of cleared forests and 116 million tonnes of carbon dioxide released into the atmosphere, according to the World Wildlife Foundation.
How can you ensure you’re in compliance with this regulation?
Businesses in the EU will have until the end of 2024 to get in compliance with the EUDR.
Manufacturers and downstream buyers of the regulated products that wish to avoid sourcing deforestation-linked commodities will need to treat their imports with extra scrutiny – a task that is easier said than done. The complexity of supply chains for commodities such as timber can make it difficult to trace a product’s chain of custody back to the point of origin. Sayari addresses this problem by integrating and analyzing publicly available information from a variety of global sources, including real trade data, to shed light on the ownership, operations, and risk exposure of companies across supply chains.
>> Everything you need to know about supply chain mapping <<
For example, public records are an especially rich source of company information in Brazil thanks to strong access-to-information laws and data transparency initiatives. However, many other countries provide some degree of public access to data on corporate ownership and control, land concessions, imports and exports, and other relevant information. Depending on data availability, the same analytical workflow can be used to assess supply chain risk in any country or sector of concern for the EUDR.
Sayari’s data and tools let users harness public records from around the world to investigate and adjudicate many forms of supply chain risk. Sayari collects information on more than 467 million companies in more than 250 jurisdictions, including company-level trade records from more than 65 countries across the Americas, Europe, Africa, and Asia. With environmental risk becoming a key concern for leading companies and investors, Sayari’s comprehensive risk information can help your team stay on top of global regulations like the EUDR and other ESG concerns.
In a recent report, Tracing High-Risk Brazilian Timber Through Global Supply Chains Using Public Records, you can learn how to stay in compliance with data that flags high-risk exporters of timber and other entities linked to deforestation.