EU's Groundbreaking Deforestation Regulation to Transform Global Supply Chains
The EU has introduced a groundbreaking Deforestation Regulation (EUDR), set to transform global supply chains and protect forests worldwide. The regulation, which requires companies to prove their commodities are not linked to deforestation, is seen as a turning point, raising the bar for traceability and reshaping management strategies.
Deforestation, primarily driven by agriculture and infrastructure development, has severe impacts on the environment, economies, and societies. Forests play vital roles in climate regulation, biodiversity, and livelihoods. The EUDR aims to tackle this by ensuring companies comply with local laws and obtain higher-quality certifications.
To facilitate this, the EUDR simplifies implementation processes and promotes proper enforcement. Businesses are already preparing, geolocating plots and mapping supply chains, with many demonstrating high levels of compliance. The regulation also accelerates traceability and moves risk management towards a more quantitative approach.
The EUDR creates opportunities for investors, with rising interest in biodiversity-positive activities. It also poses risks to companies, including reputational, market, and financial ones. Around 75% of global deforestation is driven by agriculture, with climate change accelerating the issue. The EU Export Regulation plays a key role in this shift, imposing stricter controls and due diligence requirements to ensure supply chains do not contribute to illegal deforestation.
