EUDR Countdown: Digital Traceability is Key for Deforestation-Free Supply Chains

Estimates show agriculture drives over 90% of tropical deforestation; deforestation and land use change, in turn, accounts for 11% of global carbon emissions. The climate crisis, therefore, cannot be resolved without tackling international commodity supply chains.

The EU Deforestation Regulation (EUDR) is a significant legislative measure aimed at curbing the European Union's impact on global deforestation and forest degradation. The regulation was introduced to promote deforestation-free supply chains, reduce greenhouse gas emissions, and protect biodiversity, human rights, and the rights of indigenous people.

Relevant commodities and relevant products shall not be placed, made available on the market, or exported unless all three following conditions are fulfilled:

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they are deforestation-free;
they have been produced in accordance with the relevant legislation of the country of production; and
they are covered by a due diligence statement.

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Given its scope, the EUDR affects numerous industries, particularly those involved in the processing or export of palm oil, soy, cocoa, coffee, cattle, and rubber. These impacts will include:

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Food and Beverage Industry
Textile and Leather Industry
Automotive Industry
Furniture and Wood Products Industry
Chemical industry
Pharmaceutical Industry
Energy Industry
Construction Industry

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The regulation impacts both large corporations and small to medium-sized enterprises (SMEs), mandating that large companies achieve compliance by December 30, 2024, while SMEs have until June 30, 2025, to meet the requirements.

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Companies that start collecting data and preparing themselves and their value chain for compliance will avoid the risks of penalties for non-compliance, which may include fines up to 4% of company turnover within the European Union (EU), temporary exclusion from public procurement and access to public funding, and confiscation of goods.

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By leveraging digitalization, companies can effectively meet the stringent transparency requirements in their supply chains. Streamlining processes and the collection and sharing of verified data are vital for the seamless implementation of the EUDR program. With digital tools, companies can ensure accurate tracking and tracing of goods, enabling them to demonstrate compliance and maintain trust with consumers and regulatory bodies.

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For more detailed information, please refer to the official European Commission's resources on the EUDR.

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Due to the countdown to compliance, companies should be Preparing Your Supply Chain for the EUDR, starting with Gathering Necessary Documentation. Operators must collect detailed, farm-level information about their products and create a Due Diligence Statement, which is uploaded to a system run by the European Commission. This includes:

The type of products and that they are 1) deforestation free and 2) have been produced in accordance with the laws in the production country. This information must be kept for at least five years.
Details such as the trade name, the quantity in kg, as well as the country of production and contact information of the products’ supplier and recipient.
If the product is or contains wood, the common name of the species as well as the full scientific name.
The geolocation of all plots of land where the product or parts of it have been produced or held – in the case of cattle.

Through this process, it's important to consider certain questions:

What materials, supplies, or parts must be tracked?
Do you have an internal compliance solution, or will an external solution be necessary?
What additional tools does your business require for compliance success? Ej. Like ours, MARCO Track & Trace.
How will you onboard suppliers into your compliance program?
How should suppliers be reminded to submit the data (and how often)?
How are you going to handle non-responsive suppliers?
When collecting data, how to automate and verify them?

Here are our recommendations regarding data collection:

Start collecting data early – Aid your process by collecting data early to handle any obstacles that may arise.
Collect tamper-proof data – Suppliers must provide verified information to prove legal and deforestation-free production in these areas.
Automate and facilitate data sharing – Find a way to collect data all at once to reduce the need for multiple interactions with suppliers. Digitize your data collection to avoid double cauting, human risks, and enhance transparency and trust among your stakeholders.

Meet MARCO Track & Trace: Leveraging Blockchain for Compliance

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It's no surprise that tracking goods in increasingly complex supply chains is becoming more challenging. Even well-structured companies often experience information gaps. Additionally, issues of confidentiality and trust are prevalent.

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With more parties involved in supply chains and the expansion of third-party support networks, communication disruptions are rampant, making it nearly impossible to determine who has what information and when.

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Blockchain technology solutions, such as Finboot's MARCO Track & Trace platform, seek to address these challenges by providing a streamlined approach to managing data, information, communications, and transactions. This technology has become crucial for ensuring traceability and transparency in supply chains, especially in compliance with the European Union Deforestation-free Regulation (EUDR).

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Track & Trace, our no-code/low-code digital suite that leverages blockchain, enhances the security and immutability of data, ensuring that all recorded information is authentic and unaltered. This capability is vital for maintaining a chain of custody that can withstand rigorous audits.

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Key Benefits:

Easy to Implement: MARCO's no-code/lowcode capabilities allow for quick implementation without technical programming knowledge. It offers interoperability with existing ERP and supply chain software, IoT devices, and other technologies.
Verified and Traceable Claims: The platform generates verified and traceable claims for products traded between companies and their partners. Blockchain ensures the security and integrity of records, preventing loss, forgery, or unauthorized access.
Collaboration and Transparency: MARCO facilitates the sharing of relevant data about raw materials, promoting transparency, accountability, and sustainability in supply chains. It provides a secure platform for companies to share and view data, fostering collaboration and trust among stakeholders. Process automation also leads to faster processes through automated data input and agreement validation enabled by blockchain technology.

MARCO Track & Trace real-time tracking ensures that companies can continuously monitor their supply chain's deforestation status and quickly adapt to any changes required for compliance,

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Key MARCO Track & Trace features that can support you in complying with the EUDR:

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Integrated Traceability
Automating Digital Product Passports
Facilitating Compliance (Document creation as the ISCC but for EUDR)

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MARCO Track & Trace for deforestation (EUDR)

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Immediate Action Required

The crucial takeaway for today is to start taking action immediately! Begin integrating the right tools and systems to support you on this journey. It's no longer about merely setting goals or discussing strategies. The stakes are high, and it's essential to take concrete steps, showcasing your milestones and achievements with evidence-backed data. Failure to do so could lead to significant financial disruptions for your business.

As previously mentioned, the changes facing companies and their supply chains are profound and enduring. These changes will transform markets and global economies for decades. Companies must act now, advancing on the path of transformation and decarbonization with disciplined urgency.

Finboot's Green Supply Chain Management Suite, MARCO Track & Trace, provides a strategic solution for your organization. It enables you to trace your low-carbon, circular, and renewable products, and communicate these efforts with evidence-backed data, all while enhancing efficiency and profitability. Our solution is specifically designed for EUDR compliance.

If you'd like to learn more, please reach out to our team.

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