EU's Deforestation Regulation Reshaping Businesses' Supply Chains
The EU's Deforestation Regulation (EUDR) is transforming how businesses address deforestation, making it not just an environmental concern, but a strategic and financial one. The regulation, set to come into force in 2024, is pushing companies to ensure their supply chains are free from deforestation-linked commodities.
Deforestation, primarily driven by agriculture (around 75%), is a pressing global issue. It's not just about losing trees; forests regulate climate, influence rainfall, and provide resources and habitats. The Food and Agriculture Organization (FAO) of the UN defines forest areas widely used today.
The EUDR is a game-changer. It requires companies to prove their key commodities aren't linked to deforestation and comply with local laws. Non-compliance carries serious consequences. This has accelerated traceability and shifted risk management towards a more quantitative approach. Climate change, with its increasing wildfires, is exacerbating forest cover loss.
Companies are already preparing. Many are geolocating plots and mapping supply chains to comply with the EUDR. The regulation is also creating investment opportunities, with rising interest in biodiversity-positive activities and higher-quality certifications.
The EUDR is reshaping supply chains and raising the bar for traceability. Companies are responding, making deforestation a strategic and financial concern. As climate change adds pressure, the EUDR's impact on businesses and the environment is set to be significant.
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