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EUDR: Definition and overview
EUDR in a nutshell:
The EU Deforestation Regulation (EUDR) is a regulation that will come into force in 2024 and prohibits the import of products that contribute to deforestation or forest degradation. For procurement, this means the obligation to carry out comprehensive due diligence checks on relevant raw materials such as palm oil, wood, coffee, cocoa, cattle and soy as well as their derivatives.
Example: From 2024, when procuring 500 tons of cocoa beans, a European food manufacturer must use a digital traceability system to prove that the areas under cultivation have not been deforested since December 2020 and that the GPS coordinates of the cultivation areas are registered in the EUDR database.
Contents
What is the EUDR in purchasing?
The EUDR (EU Deforestation Regulation) is a European Union regulation that aims to reduce deforestation worldwide and ensure that all goods imported into the EU do not contribute to further deforestation. The regulation requires companies importing certain goods such as timber, soy, palm oil, beef and cocoa to closely monitor their supply chains and prove that these products do not originate from deforested areas.
Main components of EUDR in purchasing:
- Emissions recording: Recording of CO₂ emissions generated during the production of imported goods.
- Purchase of certificates: Purchase of emission certificates corresponding to the CO₂ emissions recorded.
- Reporting obligation: Obligation to regularly report CO₂ emissions to the competent authorities.
- Transitional register: Establishment of a transitional register to track CO₂ emissions and the certificates acquired.
- Customs tariff numbers: Determination of the relevant customs tariff numbers for the categories of goods concerned.
Importance for buyers:
- Cost control: By factoring CO₂ costs into procurement costs, buyers can better control the total cost of goods.
- Transparency and traceability: Clear documentation of CO₂ emissions and the certificates acquired improves transparency in the supply chain.
- Legal certainty: Compliance with EUDR regulations minimizes legal risk management and potential fines.
- Sustainability goals: Supporting the company's sustainability and climate protection goals by selecting environmentally friendly suppliers.
- Supplier relationships: Promoting a collaborative partnership with suppliers who also implement sustainable practices.
EUDR in procurement: from conventional purchasing to sustainable procurement
The European Union Deforestation Regulation (EUDR) presents companies with the challenge of reviewing their supply chains in terms of sustainability and legality. While in the past the focus in purchasing was primarily on costs and efficiency, the EUDR now requires a comprehensive transformation towards responsible procurement practices. This change is crucial both to comply with regulatory requirements and to contribute to the global fight against deforestation.
Old: Traditional purchasing process
Traditional approach: In the traditional purchasing process, the focus was on price negotiations, delivery dates and quality requirements. Suppliers were selected mainly on the basis of economic criteria, without in-depth verification of the origin of the raw materials or their impact on the environment. Supply chains were often opaque and there were rarely mechanisms to manage the risk of products back to origin. This approach led to limited transparency and increased vulnerability to risks such as illegal logging or unethical practices, which can lead to significant compliance issues under the new EUDR requirements.
New: Sustainable Procurement
Sustainable procurement: The modern approach to procurement firmly integrates sustainability and compliance into all procurement processes. By using technologies such as blockchain for traceability and digital platforms for supplier evaluation, companies can monitor the entire supply chain. Innovative tools enable the verification of certifications and compliance with environmental standards in real time. This leads to greater transparency and enables companies to respond proactively to risks. Practical benefits include minimizing compliance costs, building long-term partnerships with sustainable suppliers and strengthening brand image through responsible business practices.
Practical example: Implementation of the EUDR in the food industry
An international food company has adapted its procurement strategy to meet the requirements of the EUDR. By introducing a digital supply chain management system, it was able to ensure the traceability of palm oil back to the plantations. The company worked closely with suppliers to implement sustainable cultivation methods and obtain certifications such as RSPO (Roundtable on Sustainable Palm Oil). These measures led to a 90% reduction in the risk of being associated with illegal deforestation practices. In addition
Conclusion: EUDR as a strategic success factor for sustainable procurement management
The EUDR is an important tool for companies that want to make their procurement processes more sustainable and at the same time ensure compliance with legal requirements. By integrating the EUDR into procurement management, companies can reduce their CO₂ emissions, increase transparency in the supply chain and ensure the quality of procured goods and services. Despite the challenges, such as the complexity and high implementation costs, the benefits of EUDR offer significant opportunities for a sustainable and competitive procurement strategy. With clearly defined processes, the use of modern technologies and the promotion of a cooperative relationship with suppliers, companies can successfully implement and continuously improve EUDR. This not only contributes to the efficiency and sustainability of procurement, but also strengthens the competitiveness and sustainable development of the company. Overall, the EUDR is a valuable tool in any buyer's toolbox and helps companies to make their supply chains more efficient, secure and environmentally friendly.
