EUDR Compliance: How Technology Is Changing Supply Chain Transparency
The European Union Deforestation Regulation (EUDR) is set to reshape global supply chains, demanding unprecedented levels of transparency and due diligence from companies operating in the EU market. This legislation targets key commodities linked to deforestation, including soy, palm oil, and cocoa.
At its core, the EUDR requires businesses to prove their products are deforestation-free and comply with the laws of their country of origin. It’s essential because a fundamental shift in supply chain management carries significant consequences for non-compliance, from hefty fines to market restrictions.
Who is impacted by the EU Deforestation Regulation?
The EU Deforestation Regulation (EUDR) affects all companies involved in importing, placing on the European market, or exporting the following products: soy, palm oil, wood, coffee, cocoa, cattle, and rubber. Additionally, certain derived products are included, broadening the scope of affected businesses. Companies (starting with non-SMEs) must comply with the EUDR by December 30, 2024, making it crucial to begin preparations now. Starting June 2025, small and micro businesses must also comply.
The challenge lies in the complexity of modern supply chains. Tracing products back to their source and providing evidence of compliance is no small feat. It requires a level of oversight many companies have never before attempted.
This is where technology becomes crucial. Advanced tools like satellite monitoring, blockchain, and AI-driven analytics are emerging as vital allies in the quest for EUDR compliance. These technologies offer the capability to track commodities from field to shelf, providing the transparency and traceability the regulation demands.
John Morrison, CEO of the Institute for Human Rights and Business, puts it succinctly: “Technology can act as a powerful enabler of transparency in supply chains, but it requires the right framework and commitment to make it truly effective.”
However, implementing these technologies is not without its challenges. Covering the entire required process—from data collection to creating due diligence statements—is a daunting task. It requires a comprehensive strategy that integrates various tools and approaches.
To navigate this complex landscape, companies need a clear understanding of the available technological solutions. Our market assessment of vendors offering EUDR compliance tools provides a roadmap for businesses looking to stay ahead of the curve.
The EUDR isn’t just about compliance—it’s an opportunity for companies to rethink their supply chains and turn regulatory requirements into a competitive advantage—those who act swiftly and strategically will be best positioned to thrive in this new regulatory environment.
As the implementation date approaches, the urgency for action grows. Companies must start now to integrate EUDR compliance into their broader due diligence efforts. This integrated approach will not only streamline compliance but also reduce operational complexities across multiple regulations.
In this rapidly evolving landscape, agility is key. As Klaus Schwab of the World Economic Forum notes, “In the new world, it is not the big fish that eats the small fish; it’s the fast fish that eats the slow fish.” Companies that adapt quickly to the EUDR’s requirements will succeed.
The EUDR represents a significant step towards sustainable and responsible supply chains. By leveraging technology and embracing transparency, businesses can contribute to global efforts to combat deforestation while ensuring their long-term viability in the European market.
As companies navigate this new terrain, the concept of a Digital Product Passport could play a crucial role. This digital record, containing key information about a product’s origin, composition, and environmental impact, aligns closely with the EUDR’s goals. Implementing such a system could streamline compliance efforts, providing a standardized method for tracking and verifying product information throughout the supply chain.
Learn How to Optimize Your Product Life Cycles with Digital Product Passports.
Larissa Scherrer de Quadros
Marketing
