The unintended and worrying consequences of EUDR

The European Union Deforestation Regulation (EUDR) is a major – some would say the most major – piece of legislation globally, aimed at reducing deforestation linked to the importation of some prominent food and non-food commodities to the EU. There is no doubt that it is driving some significant changes in how companies, both European and global, are rethinking their supply chains for the commodities in the legislation.

Companies are implementing more rigorous due diligence processes to ensure that their supply chains are deforestation-free, increasing their auditing and certification investment to verify that their suppliers meet EUDR standards.

A smaller number of businesses are considering – and actually investing in – far more sustainable farming systems that greatly reduce their environmental impact. It appears that a growing number of potentially affected companies are now more inclined to move their sourcing away from the high-risk areas. Additionally, I have witnessed first-hand a greater interest in how science and technology innovations can enhance the tracking of commodity origins to better ensure legislative compliance. The legislation has prompted more interest and understanding of the importance of supply chain transparency than ever before.  

Overall, many positives are already evident in terms of realising the fundamental aim of EUDR. However, all legislative changes have the potential to drive unexpected or in some cases unwanted changes as well. This is a subject to which I’ve given significant thought and have spoken with knowledgeable individuals who understand the complexities of supply chains to garner some ‘insider insights’. Not only will there be increased opportunities to try and cheat, but EUDR will also present the unscrupulous with opportunities to perpetrate feed and food fraud. This will be largely around false claims of origin of commodities coming into the EU due to varying degrees of bribery, corruption, false documentation and even some companies turning a blind eye to where their purchases come from.

Those that will want to be compliant (ie, the vast majority of businesses) will find it more difficult and expensive to source EUDR-compliant products. This will likely result in some delays in sourcing, increased costs and potentially shortages of certain products. Businesses and consumers will feel the financial and availability impacts.

But what other changes are we likely to see? Based on my aforementioned conversations another large problem looms. It seems that some countries and companies have identified massive commercial opportunities by shifting to commodities that are not yet covered by the legislation.

At a recent food systems sustainability meeting that I attended in Hong Kong, I was informed about the massive amount of cassava being grown in several countries in the Mekong region, with vast areas of rainforest being cleared to further accelerate  production. Why is this the case? Quite simply it is being seen as an alternative source of feed for livestock to replace soya, one of the five listed foods in EUDR. The economic benefits to smallholder farmers in these countries is very clear, as is the external revenue being generated for the countries involved. However, the impacts on the tropical rainforests in the region in terms of biodiversity loss and increased GHG emissions will be huge.

This particular tale of horror worsened as I learnt that several large companies are eagerly supporting this shift to larger scale cassava production. The companies mentioned talk much about their sustainability credentials but it seems money talks far louder in their board rooms… While they are not breaking the law, as far as I can tell, these kinds of business practices raise serious moral and ethical questions. Reputationally, I think they are walking a very slippery tightrope….

So it would seem that some large companies who talk a good sustainability story are in fact habitual greenwashers and need to be called out. I envision several trustworthy NGOs having a major role to play in this. I also think the regulations will have to broaden to include many more commodities in an attempt to prevent what I see as sharp practices by some companies who value their share prices more than the planet.