Achieving EUDR Compliance in 6 Steps

Hope Bristow

Associate Director

Aviela Hochberg

Senior Consultant

Contents

• Step 1: Understanding Obligations
• Step 2: Engaging Stakeholders
• Step 3: Developing a Policy
• Step 4: Engaging Suppliers
• Step 5: Monitoring
• Step 6: Identifying Partners
• Contact Us

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In April 2023, the European Union’s Parliament approved the EU Deforestation Regulation (EUDR), a groundbreaking regulation designed to ban imports of commodities that drive deforestation at a global scale, namely: soy, beef, palm oil, wood, cocoa, coffee and rubber – and their derivatives. As a replacement to the EU Timber Regulation, it has marked a key shift from focusing solely on the legality of products to embracing a broader sustainability perspective.

Companies in scope of the law will be required to carry out due diligence on relevant products imported and/or exported into or from the EU. Companies will need to exercise due diligence in supply chain management, scrutinise their sourcing practices, and ensure relevant products meet the criteria set by the regulation prior to importing and/or exporting.

Understanding the requirements of the law and taking the necessary steps to prepare for compliance can be overwhelming. At Anthesis, our Forest Positive team is ready to support companies in navigating the complexities of the EUDR. As a recognised Delivery Partner by the Accountability Framework initiative (AFi), we utilise international norms and good practices to help companies assess, prioritise, and address deforestation-related risks in their supply chains.

Using the Accountability Framework as a roadmap, we support companies through the following steps on their journey toward EUDR compliance.

Step 1: Understanding your Obligations

Any company that sells products within the EU market is subject to the regulation. While companies based outside of the EU technically fall outside of the scope of the law, we know that, in practice, to get a product to market, non-European companies will need to play an active role in data collection and information sharing with their European partners.

Additionally, reporting responsibilities will vary based on whether your company is considered an operator or trader, or is an SME or not. Furthermore, due diligence is only required for certain commodities with designated HS/CN codes that are listed in Annex I of the regulation. This includes, for example, cocoa beans, leather, palm kernel oil, vulcanised rubber, soybeans, sawn wood, fiberboard, etc. Some products may be excluded, namely embedded commodities like palm oil contained in a bar of soap, as well as post-consumer recycled material and packaging material actively being used to carry another product placed on the market.

To help you understand if the EUDR applies to you, Anthesis has developed an EUDR Screening Survey, available through MERO, our cloud-based sustainability software solution. When paired with our Forest Positive advisory services, we can help you confirm your potential reporting obligations under the law and provide you with a detailed sense of any gaps related to your current program, including potential areas for improvement related to:

• Traceability initiatives
• Data management
• Supplier engagement
• Risk identification & management
• Monitoring and verification systems
• Internal policies and procedures

Step 2: Identifying and Engaging with Internal Stakeholders

At this stage, you have determined that you are obligated to comply with this new legislation and you may have flagged some internal gaps or obstacles during the process (e.g., data management, traceability). To be on track towards compliance, you will need to make sure that all relevant internal teams are aligned and ready to do their part. To do that, you will need to identify the key internal stakeholders with whom you will need to engage, and what their role in EUDR compliance will be.

Internal Stakeholder	Their Role	Questions to Consider
Procurement Teams	Support supplier engagement initiatives, as they tend to have the strongest relationships with your suppliers.	How do you currently engage with suppliers? Are your suppliers prepared to comply with the EUDR?
Sustainability Teams	Develop strategy and guidance on making progress toward a deforestation free supply chain.	What existing responsible sourcing initiatives might already support EUDR compliance? How can they be further expanded upon?
Risk Management Teams	Incorporate EUDR-specific due diligence procedures into existing systems – e.g. deforestation risk assessments.	Can you revise existing risk management procedures or processes to incorporate an assessment of deforestation risk?
General Council	Confirm and seek support regarding regulatory obligations.	What are your confirmed regulatory obligations?

Step 3: Developing a No Deforestation Policy & Governance Structure

Once you’ve identified and convened your key internal stakeholders, you can begin working together to either develop or adapt a clear no deforestation policy and governance structure that aligns with the sourcing requirements of the EUDR.

The Accountability Framework provides guidance to develop a strong policy that includes key elements necessary for an EUDR aligned no-deforestation policy. For example, the policy should:

• Have cut-off dates no later than 2020, as specified by the EUDR and definitions that align with the law.
• Include a commitment to respecting all human rights, including the rights of indigenous peoples, local communities, and workers’ rights.
• Set clear responsible sourcing expectations for the company as well as suppliers (e.g., establish supplier codes of conduct).

An internal governance structure will then help ensure that the policy is followed and that measures are taken when a grievance occurs. A strong governance structure:

• Allows all relevant internal stakeholders (executive leadership, responsible teams for execution, boards) to be involved.
• Ensures accountability by senior leadership.
• Has clearly delineated roles and responsibilities, ownership, and accountabilities.
• Offers a practical approach for managing the implementation of the deforestation policy, ensuring alignment with existing programs and procedures.

Step 4: Engaging with Suppliers and Increasing Traceability

Once your new or updated policy is in place, it’s important to start communicating your strengthened commitment, data requirements, and sourcing expectations to suppliers. One particularly crucial piece will be improving traceability. The EUDR requires companies importing or exporting relevant commodities to provide geolocation coordinates of the farm, forest, or pasture patch the product originated from. Getting and retaining the necessary information will require:

• Evaluating what tools and platforms your company currently uses to collect supplier information.
• Determining how this data is maintained using platforms and software.
• Assessing how the data feeds into risk management.

There are several tools that can help companies collect supplier information, including the Anthesis Compliance Suite (ACS). ACS is a reliable, cloud-based tool that can automate your EUDR data collection process. It seamlessly integrates with leading enterprise systems like SAP, Oracle, PTC, Siemens, etc. ensuring a smooth transfer of information. We provide expert validation services with our team of analysts to ensure the accuracy and reliability of your data.

Step 5: Monitoring

Obtaining geolocation coordinates is what allows companies and regulators to detect deforestation without having to be spread across millions of sites. By using geolocation data and satellite technology, companies can detect changes and follow up with suppliers and field level staff to confirm whether deforestation occurred and its magnitude.

The EU has issued resources to assist companies in monitoring and evaluation, which can be found on the Forest Observatory. The Accountability Framework’s Operational Guidance on Monitoring and Verification  as well as the Risk assessment, traceability and monitoring tools also provide guidance on what to consider and look for when developing a monitoring approach (e.g., imagery resolution, forest types covered, orbit time), as well as recognised platforms and partnerships.

Whether monitoring is done in-house or through a partnership with a remote sensing partner, it will ultimately be the responsibility of companies to ensure that whatever monitoring approach or tools are used are aligned with the EUDR, and that protocols are in place to verify and address identified cases of deforestation or degradation.

Step 6: Identifying Partners Beyond Your Supply Chain

Steps one to five have focused on what companies will need to do internally and with their suppliers and potentially remote sensing partners to prepare for the EUDR. However, to create the changes needed to make the EUDR a lasting success, companies will need to form partnerships beyond their supply chain.

There is no singular way to collaborate, but the AFI’s Operational Guidance on Achieving Commitments Through Collaboration offers a few tips for getting started:

• Identify stakeholders across the sectors, jurisdictions, and/or landscapes that you would like to contribute to.
• Join active policy efforts or multi-stakeholder initiatives that operate within the landscape and/or sector you source from.
• Get your existing partners—suppliers and other supply chain actors—on board.

Many companies are focused just on what they can achieve in the next six months ahead of the EUDR coming into full effect. However, we know that the change needed within sectors and sourcing landscapes will not occur if companies only focus on ensuring that their supply chain is compliant with the law instead of focusing on what they can achieve together.

 Whether your company is on step one or step six, Anthesis is here to help you in your forest positive journey.