EU's New Deforestation Regulation Targets Agriculture's Role in Forest Loss
The EU has taken a significant step to combat global deforestation with its new Deforestation Regulation (EUDR). Around three-quarters of forest loss worldwide is linked to agriculture, making the EUDR's focus on traceability and risk management crucial. This new regulation aims to protect forests and their vital roles in climate regulation, biodiversity, and livelihoods.
Deforestation, the permanent conversion of forest land, has severe impacts on the environment and societies. The EUDR addresses this by accelerating traceability and moving towards a more quantitative approach to managing deforestation risks. Companies are now required to prove that key commodities, such as palm oil, cocoa, and coffee, are not linked to deforestation and comply with local laws.
The regulation has sparked preparations among companies. They are geolocating plots and mapping supply chains to demonstrate compliance. This shift is reshaping how supply chains are managed and monitored, and could lead to wider adoption of sustainable practices. For companies and investors, deforestation poses significant reputational, market, and financial risks, making the EUDR a critical factor in supply chain management.
The EUDR also creates opportunities for investors. It has sparked rising interest in biodiversity-positive activities and higher-quality certifications. Proper enforcement and simplified implementation processes are crucial for the EUDR to protect forests and create fairer markets. The Food and Agriculture Organization of the United Nations (FAO) provides the most widely used global benchmark for defining 'forest area', aiding in the regulation's implementation.
The EUDR is a significant stride in combating global deforestation, with around 75% of forest loss linked to agriculture. By raising the bar for traceability and reshaping supply chain management, the EUDR protects forests and their vital roles in climate regulation, biodiversity, and livelihoods. It also presents opportunities for investors in sustainable practices and higher-quality certifications. With proper enforcement and simplified implementation, the EUDR can create fairer markets and protect forests worldwide.
