What needs to be done due to EU's new Deforestation Regulation - Practical tips for addressing growing reporting demands

The EU Deforestation Regulation (EUDR) is an initiative that, according to EU commission, aims to minimize the EU's contribution to global deforestation, combat the degradation of forests, and reduce greenhouse gas emissions and biodiversity loss.

Launched on June 9, 2023, with enforcement starting on June 29, 2023, the regulation brings about an 18–24-month transition period for businesses, extending up to 54 months (about 4 and a half years) for wood products based on production timelines.
 

Growing reporting demands

The regulation mandates operators to ensure deforestation-free supply chains for products sold within or exported from the EU. These products must comply with the legislation of the country of origin and be accompanied by a Due Diligence statement.

Operators must identify each plot of land used for raw timber, ensuring no adverse impact on the forest's condition. This information is submitted to the EU Commission via a dedicated Information System. With this system a unique reference number is generated for each tree assortment and wood product produced and the reference numbers are linked to the specific plot of land and logging activity.

To meet the regulation's demands, a due diligence system must:

• Enable traceability of product origin.
• Record quantities, suppliers, countries of origin, and legal certifications.
• Include geolocations of plots of land of harvesting activities.
• Document risk assessments and reduction plans.
• Retain data and documents for a minimum of 5 years.

The Information System is currently in pilot testing phase with selected group of stakeholders and training environments are scheduled to be generally available during next summer.
 

Where to start?

While many aspects remain uncertain due to the EU systems not being fully developed, and numerous details and definitions awaiting clarification, it is crucial for companies in the forestry sector to initiate preparations.

We have worked with some clients that want to better understand the impacts of the EU Deforestation Regulation. In this context, for example leveraging service design can help to visualize how the new reference number policy would impact on the wood supply chain.

Practical steps to get started:

1. Use service design for problem identification 
   Utilize service design methodologies to identify challenges and needs within your data reporting processes. A thorough understanding of the existing system's pain points is the first step in streamlining and improving data reporting responsibilities.
    
2. Optimize data reporting processes
   Implement efficient data reporting processes. This involves not only reporting the required data but also integrating it seamlessly into your existing workflows.
    
3. Ensure your technology infrastructure is ready for EU reporting requirements
   Be prepared for the introduction of new reporting systems and their seamless integration. Recognize the interconnected nature of reporting demands, acknowledging that reporting will be expanded and involve connections with various systems.

Pick a right partner to support you on the journey towards becoming data-driven

This regulatory framework requires operators to maintain transparency, diligence, and meticulous record-keeping, ensuring that the entire process from the forest to the final product is not only traceable but also environmentally and legally compliant.

On this journey we can support our clients with a blend of industry knowledge, data proficiency, technological prowess, and change management expertise. We provide a holistic approach that helps unlock the transformative power of data to address new market realities and drive smart, sustainable and resilient operations.

Contact us to learn how we can collaborate to advance your data-driven transformation.