First steps with the new European regulation limiting deforestation

Film by Gloria Figaroa

NORTHAMPTON, MA / ACCESSWIRE / June 24, 2024 / Forests are rapidly disappearing around the world, and deforestation and forest degradation now pose the greatest threat to the world’s forests. To stop this devastating situation, the EU is in the process of implementing the EU Deforestation-Free Products Regulation (EUDR).

Burning Platform

About 10% of the world’s forests – an area larger than the European Union – have been lost to deforestation in the last 30 years, and another approximately 10% of the world’s forests are severely fragmented and disconnected or missing at all. While not a new phenomenon, the current scale and pace of destruction is alarming and is causing significant social, economic and environmental impacts, locally and globally.

Deforestation is one of the main drivers of climate change and biodiversity loss, and countries across the EU contribute to this phenomenon by demanding and consuming a significant proportion of deforestation-related products. By taking responsibility for this, the EU is committed to helping to solve these problems by protecting and improving existing forests, especially primary forests, while significantly increasing the sustainable, biodiverse extent of forests around the world. To achieve this goal, the EU has developed a Deforestation-Free Products Regulation, which is due to enter into force in December 2024.

To improve the condition of existing forests and significantly increase the sustainable, biodiverse extent of forests around the world, EUDR includes five main priorities:

• Reducing the consumption footprint in the EU and encouraging the consumption of products from deforestation-free supply chains

• Work with producing countries to reduce pressure on forests

• Strengthen international cooperation to stop deforestation and encourage forest restoration

• Redirect funding to support more sustainable land use practices

• Supporting the availability and access to information on forests and commodity supply chains, and supporting research and innovation

What’s at stake

The new regulation affects many industries and market segments, including consumer products, chemicals, pharmaceuticals, agriculture, energy, retail, automotive, and milling and forestry, which includes the paper, timber and timber industries. The regulation covers seven goods that consist mainly of agricultural raw materials or raw materials, including cocoa, coffee, soybeans, timber, palm oil, rubber and cattle, which are directly linked to deforestation and forest degradation. This also affects derived products, i.e. products made using these raw materials, such as chocolate with cocoa, wooden furniture or fresh chicken meat resulting from feeding poultry with soy-based feed.

The story continues

The regulation most affects enterprises such as producers and exporters of these goods and their derivatives. Large companies in these categories must comply by December 2024, while small and medium-sized companies have until June 2025. To be approved for use in the EU, products must be covered by a due diligence declaration (DDS) for each delivery, linked to a traceability system, including chain of custody evidence from the source demonstrating that the product is free from deforestation and produced in accordance with applicable regulations.

Main impact on operators

The legislation has two broad implications:

• Companies need to carry out supplier risk assessment To ensure that suppliers of these seven goods meet requirements, they have mapped the land areas (shapefiles) of their supply sources and that their production does not violate local laws and regulations. They must implement remedial action plans where necessary.

• Companies must do this daily DDS reporting for delivery to the EUDR portal, including a shapefile of the geolocation of all plots where the goods or their derivatives were produced, requiring traceability of the supply chain.

Responding to these impacts is an onerous task and, for a typical large EU entity, may involve creating and sending hundreds of thousands of due diligence statements to the EU each year. Due diligence statements must be retained for five years and must be audited, making these tasks suitable for automation.

How to start

Non-compliance with the EUDR may result in financial penalties, lack of market access, reputational risk and other consequences. Companies need an affordable, efficient solution to help them meet their immediate reporting requirements, and SAP Green Token sustainability tracking software is updated to meet these requirements.

The ready-to-use SAP Green Token solution now includes DDS reporting capabilities and can meet most customer technical requirements. It can share information about mixed goods in separate supply chains with downstream partners and generate declarations.

SAP Green Token is developed to help support automatic EUDR DDS reporting and meet audit history requirements. Work is also ongoing on integration with data providers to obtain standard location information and integration with the EUDR reporting platform called TRACES for importing operators. Further extensions will enable connection to SAP business networks focused on sustainability and end-to-end user experience scenarios.

Are you prepared to cope with the upcoming changes?

There is no better time than the present to prepare for the new regulatory environment that is expected to come into effect by the end of the year.

Companies can start preparing by working with suppliers to initiate the due diligence process, which involves three steps. This starts with collecting relevant data on the types of products affected and ensuring they are produced in accordance with regulations. If not, remedial steps can be taken in cooperation with partners and suppliers.

Companies must then conduct risk assessments that address country-specific issues, from human rights violations to product traceability. In this case, remedial steps can be taken together. Finally, the key to achieving compliance is the right technology.

SAP Green Token can provide companies with the ability to track commingled materials in products using digital twins, segregated accounting and blockchain technology to help prove sustainability. Not only can SAP Green Token help you deal with this new regulation, but it can also help you demonstrate progress on your overall environmental, social and governance (ESG) obligations and create a streamlined, transparent material tracking and tracing process to help drive a more sustainable , a circular approach to business – one that benefits people and our planet, and at the same time generates profits.

Gloria Figaroa is part of the SAP Green Token product marketing department at SAP.

View additional multimedia and more ESG stories from SAP at 3blmedia.com.

Contact info:
Spokesperson: SAP
Website: https://www.3blmedia.com/profiles/sap
E-mail: [email protected]

SOURCE: SAP

View the original press release at accesswire.com