Trase: Maintaining momentum towards deforestation-free supply chains

European Commission

The Commission should prioritise delivering the benchmarking system and IT system which are critical to support the efforts of member states and companies to prepare for implementation. Robust risk benchmarking principles are vital to support achievable, pragmatic and uniform enforcement of the law by helping authorities target enforcement checks based on evidence of where the risk of non-compliance is greater. As deforestation varies greatly within countries, Trase recommends risk classifications which distinguish between regions within countries and specific commodities. A variety of existing datasets enable the identification of locations with the highest rates of deforestation and link this to commodity-production drivers. Data availability is not a barrier for the development of a credible and evidence-based benchmarking process.

Another priority for the Commission is to provide further support for member states and producer countries through improving communication regarding the EUDR’s requirements, filling any remaining gaps in guidance and fostering international collaboration. Listening to the concerns of all parties, including local producers, governments, companies and civil society, and providing any necessary additional support, is crucial to ensure a clear and consistent understanding of the EUDR.

In particular, working with producer countries to strengthen national traceability systems can play a key role in mitigating the risks of smallholders being excluded and a two-tier market created (where commodities associated with higher levels of deforestation exposure are channelled to non-EU markets and there is little impact on deforestation). The Commission should follow through on commitments to set up dedicated partnerships with producer countries to deliver the preservation and sustainable management of at-risk forests, going beyond the narrow due diligence focus of the regulation to achieve a just transition to deforestation-free supply chains.

EU member states

EU member states have a critical role in enforcement and each country should make swift progress on ensuring they are sufficiently resourced to enforce the EUDR. To date, five countries have not yet nominated competent authorities, including Poland which has the seventh-highest exposure to imported deforestation among the EU27. It is crucial that these authorities are supported to put in place risk-based plans for targeting enforcement checks which are workable and pragmatic. Risk-based enforcement plans must have the flexibility to successfully account for the range of data and traceability frameworks which companies will be considering in their due diligence. Using open data from sources such as Trase can help competent authorities to triage risk by providing insights on sourcing regions and supply chains with the highest risks of commodity deforestation. Knowledge exchange and lesson sharing between competent authorities will be critical in building capacity efficiently, such as resources and guidance on legal compliance checks.

Operators and traders

Companies regulated by the EUDR should continue to work towards compliance by putting in place the necessary due diligence processes for assessing deforestation and legal risk in their supply chains. They should collaborate with each other to agree common approaches to traceability that minimise the burden on producers and create a level playing field between competitors. They should also collaborate with producer governments on the development of national traceability systems that are inclusive for all members of their supply chains.

Trase data can be used by companies as one source of evidence in the risk assessment step of the due diligence process alongside other sources. In particular, Trase can provide relevant information on the prevalence of deforestation in a country of production through its extensive data on subnational commodity deforestation.

Producer countries

The postponement period provides producer countries with additional time to engage with the EU and secure the necessary resources to develop their national traceability systems, support local producers in achieving readiness and learn from best practice examples. Brazil and Indonesia are two of the most significant countries for EU exposure to deforestation, and yet both have considerable experience in addressing the issue from which other countries could learn.

Brazil has well-developed legislation to regulate land use, extensive experience in monitoring deforestation and multi-sectoral supply chain initiatives which are aligned with the goals of the EUDR.

Indonesia has considerable experience in strengthening policies and schemes such as Indonesian Sustainable Palm Oil certification to align with the EUDR. It is a leader in terms of enhancing corporate transparency and traceability requirements across the palm oil and wood pulp supply chains, as well as ensuring the consistent enforcement of laws against environmental and social violations.

While an extra 12 months before implementation can help ensure a smoother transition, ultimately, the requirements of the EUDR remain the same and momentum towards deforestation-free supply chains must be maintained. The successful implementation of the EUDR is key both to reducing the deforestation exposure of the EU and – most significantly – stimulating action towards decoupling commodity production and trade from deforestation and ecosystem conversion by both key importing markets and producer countries.