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5 steps companies can take to prepare for new EU deforestation regulation

29 March 2023

See the top 5 ways companies can prepare for upcoming legislation on deforestation in their supply chains.

5 steps companies can take to prepare for new EU deforestation regulation

Later this year, the EU is expected to formally adopt a regulation on deforestation-free products that will prohibit companies from putting products on the EU market that are associated with deforestation or forest degradation, or that were illegally produced. The targeted commodities are cattle, cocoa, coffee, palm oil, rubber, soy, and wood, as well as some products derived from these commodities. A good summary of the EUDR is available in this FAQ from Accountability Framework initiative (AFi) Coalition member Preferred by Nature.

Using the Accountability Framework as a roadmap, companies can make progress towards achieving responsible supply chains and prepare for EUDR compliance. The Framework is a consensus-based resource that can support companies at any stage of their ethical supply chain journeys. In preparation for EUDR, it can help companies take action now across five key areas of their operations and supply chains.

1. Company policies and sourcing codes

A clear policy signals a company’s intentions to regulators, stakeholders, and suppliers. It is an important foundation for supply chain due diligence and directs any changes the company may need to make in its business. The Accountability Framework’s elements on setting strong goals can help companies write a no-deforestation policy that aligns with EUDR requirements.

2. Company management systems

Sound management systems and leadership buy-in are necessary to translate policies into practice across every aspect of a business. The Accountability Framework outlines the essential elements of management systems that support fulfilment of ethical supply chains. These include effective grievance mechanisms to enable stakeholders to bring potential deforestation incidents to companies’ attention before they become bigger problems.

3. Supply chain mapping and traceability

The EUDR requires companies to verify that deforestation did not occur where a commodity was produced. For companies that cannot yet trace commodities to their origins, the AFi offers different approaches to help them start addressing that gap in preparation for EUDR. The Accountability Framework’s Operational Guidance on Supply Chain Management explains ways for companies to do this directly or through their suppliers.

4. Supplier engagement, including with smallholders

Engagement with suppliers is critical to achieving no-deforestation goals, advancing supply chain traceability, and addressing non-compliance. It is important for companies to communicate expectations to their suppliers. Additionally, many suppliers, particularly smallholders, will need support to meet new requirements. The Accountability Framework’s Operational Guidance on Supply Chain Management and Smallholder Inclusion in Ethical Supply Chains can help companies effectively engage suppliers.

5. Monitoring systems

To comply with EUDR, companies must know where commodities originate as well as whether deforestation or forest degradation has occurred there after the 31 December 2020 cutoff date. The Accountability Framework’s Operational Guidance on Monitoring and Verification describes good practices for accurate and credible supply chain monitoring.

These five steps can help companies make the improvements needed to comply with EUDR and similar existing and expected legislation. Implementing ethical supply chains using the Accountability Framework also helps companies meet the expectations of commodity buyers, financial institutions, and industry associations. Further, it enables them to take an integrated approach to addressing both environmental and human rights issues. Doing so positions companies to fulfil not only the EUDR but also other legislative requirements as well as targets on climate, nature, and sustainable development.

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