Demystifying EUDR – FAQs

Embarking on a journey to understand the European Union Deforestation Regulation (EUDR)?

Navigating the intricacies of this regulation is crucial for companies in the agri-food sector.

EU consumption accounts for 10% of global deforestation

As we delve into the frequently asked questions (FAQs) surrounding the EUDR, we’ll unravel the key aspects, compliance nuances, and implications for businesses involved in the trade of certain commodities. Whether you’re seeking clarity on geographic coordinates, traceability requirements, or the impact on your supply chain, this blog will serve as your comprehensive guide to demystifying the EUDR landscape.

Let’s address the common queries and equip you with the knowledge needed to navigate this regulatory terrain with confidence.

EUDR Compliance

The EU Deforestation Regulation Compliance requires companies importing specific commodities into the EU to furnish proof of their deforestation-free status.

Geo-Location Traceability

To demonstrate the absence of deforestation in the production of a commodity, it’s imperative to furnish geographic coordinates pinpointing the specific location. These coordinates must be submitted through the due diligence statement into the Information System before placing products on the EU market or exporting them. For plots exceeding 4 hectares, used for non-cattle farming, geolocation is submitted using polygons. Both operators and traders bear the responsibility for fulfilling these obligations.

What is the due diligence requirement on the origin of all forest risk commodities?

This entails extending the traceability efforts beyond direct suppliers and reaching back to the original source. The regulation further mandates the recording of supplier names and geolocation, emphasizing that operators must gather the geolocation coordinates of all land where the relevant commodities and products are produced. The format can vary, using either GPS coordinates or polygons, contingent on the size of the land plot.

Do suppliers need to tell where they source supply from?

We understand that companies face challenges in this regard, especially when their EU suppliers are hesitant to share such information. This reluctance can stem from various reasons, including a lack of comprehension about the requirements, the suppliers themselves not possessing the upstream information, or concerns about potential disintermediation. Regarding privacy measures, the European Union/European Commission outlines that commercially sensitive information, such as the identity or location of operators’ suppliers, will only be shared with authorities in EU Member States for enforcement purposes and will not be disclosed publicly.

Do we need Geo-coordinates or polygons?

Geolocation’ refers to the geographic location of a land plot identified by latitude and longitude coordinates, comprising at least one latitude and longitude point with a precision of at least six decimal digits. In the case of relevant commodities, excluding cattle, and for plots of land exceeding 4 hectares, the geographical location must be conveyed using polygons. This entails providing adequate latitude and longitude points to delineate the perimeter of each land plot.

How is the due diligence enabled for verifying coordinates/polygons?

Operators can utilize satellite imagery to validate coordinates or polygons, leveraging various free and open-source datasets for verification. This involves selecting the harvest date, zooming in on the provided coordinates, and examining the crop type and land cover. By cross-referencing this information with geo-spatial imagery databases, operators can enhance their confidence in the accuracy of the details received. For example, if a supplier provides region and coordinate information, and upon verification, it is observed that significant tree coverage still exists on the supposed harvest date, rigorous due diligence and potential rejection of the inbound shipment may be necessary.

Can a polygon cover several individual plots of land?

Polygons should be employed to delineate the boundary of the land plots where the commodity is cultivated. Each polygon must represent a distinct plot of land, whether contiguous or not. It is essential to note that a polygon is not suitable for outlining the perimeter of a random land area that may encompass plots of land only in specific sections.

Scope

What are the products included in the Regulation?

What about products that do not contain or are not made of the commodities in the scope?

Products that do not contain, or are not made of, the commodities within the scope of the Regulation are not covered by the Regulation.

What about products manufactured in the EU?

The Regulation applies to products listed, whether there are produced in the EU or imported.

Chain of Custody

How does it work for products traded in bulk or composite products?

For commodities traded in large quantities, like soy or palm oil, it is the responsibility of the operator (or traders that are not SMEs) to guarantee the identification of all land plots associated with a shipment. It is crucial to ensure that the commodities are not blended at any stage of the process with those of unknown origin or from regions deforested or degraded after the cut-off date of 31 December 2020.

What is the Chain of Custody approach required?

The Regulation mandates that commodities used in all products within its scope must be traceable to the plot of land. Mass balance chains of custody, allowing the mixing of deforestation-free commodities with those of unknown origin or non-deforestation-free commodities at any point in the supply chain, are prohibited. This is because they do not ensure that the commodities entering the Union market or being exported are deforestation-free. Consequently, commodities destined for the Union market or export must be kept separate from those of unknown origin or non-deforestation-free commodities at every stage of the supply chain. Since mass balance is excluded, full identity preservation is not required.

What happens if one part of a shipment is non-compliant?

In case a portion of a shipment is non-compliant, it must be identified and isolated from the rest before the shipment is placed on the market or exported. If identification and separation are not feasible, such as when non-compliant products are mixed with others, the entire shipment is considered non-compliant.

Due Diligence Requirements

What are the Due Diligence requirements?

• The initial step involves gathering the required information, including the name of the commodity or product intended for import or export, which includes geographical coordinates as mentioned earlier.
• In the second step, companies must cross-verify this information with the risk assessment pillar of their due diligence system to assess and evaluate the risk of non-compliance. The information collected needs to align with the risk assessment criteria outlined in Article 10 of the regulation.
•  Lastly, in the third step, companies must implement measures to address any identified risk of non-compliance and thoroughly document these measures.

Data Integrity

What are the set of Data requirements?

• Reliable and secure storage of essential due diligence information, ensuring data is timestamped and tamper-proof.
•  Audit-worthy digital records encompassing all stakeholders within a designated supply chain and their respective products.
•  Effortless and secure accessibility to pertinent information for certifiers, authorities, and customers Interconnected information that is easily navigable without the need to sift through emails and paperwork.
•  Shipment details shared with buyers, enabling them to trace the product’s origin and conduct due diligence/risk assessment.
• Simple demonstration of compliance upon receiving shipments

How is Data Security achieved?

The decentralized and immutable blockchain ledger, recording and verifying transactions, assists importers and exporters in achieving traceability and transparency throughout the entire supply network. Every stage, from harvesting and processing to distribution, can be documented on this purpose-built technology, offering a detailed history of the product’s origin and movement. This enhanced visibility of the chain of custody makes it easier to identify potential risks or illegal activities.

Navigate the path with Traceability Solutions from TraceX

TraceX’s traceability solutions play a pivotal role in assisting companies to navigate EU Deforestation Regulation (EUDR) compliance. By providing end-to-end visibility into the supply chain, these solutions enable companies to track the journey of their products from source to destination. This comprehensive traceability ensures transparency and accountability, aligning with the requirements of EUDR. By accurately geo-mapping plots, documenting and monitoring the flow of goods, companies can adhere to the regulation’s standards, mitigate deforestation risks, and contribute to sustainable and responsible business practices.

Conclusion

In conclusion, navigating the complexities of the EU Deforestation Regulation can be a challenging endeavour for businesses. However, with innovative solutions like TraceX’s blockchain-powered traceability, the path becomes clearer. By leveraging advanced technology, companies can not only meet the regulatory requirements of the EUDR but also enhance transparency, accountability, and sustainability across their supply chains. Embracing such cutting-edge solutions is not just a compliance necessity; it’s a strategic move toward a future where deforestation becomes a distant memory, and responsible sourcing becomes the norm.

Let TraceX be your partner in this transformative journey towards a greener and more sustainable tomorrow.