that particular plot of land had not been subject to deforestation.” Responsibility to comply with the EUDR runs up and down the supply chain. But, luckily, the law doesn’t force each trading partner to perform due diligence from scratch if another supplier has already completed that function. For example, a supermarket chain whose products include thousands of packaged foods made with soy can check to see if food processors or distributors have already performed due diligence on those products. “If so, you can just quote the reference number associated with that statement,” Getter says. To prepare for the EUDR, first determine whether you already use a due diligence management system to comply with other government rules, such as the EU Timber Regulation. If you don’t have such a system, start planning to implement one, and start gathering data to populate the system. “You might discover that you don’t exactly know where a lot of your products are
for information: “How are they dealing with concepts of forced labor? What is their process for validating or onboarding their tier one and tier two suppliers?” Peck says. Assent monitors publicly-available information on behalf of customers, and it administers a survey called the Slavery and Trafficking Risk Template to gather information from vendors. QAD, through its supplier relationship management solution, also helps importers administer questionnaires. “You have to vet your suppliers and their supply chain—everyone who’s touching those goods,” Peck says. 2. European Union Deforestation Regulation Manufacturers, distributors, and retailers that operate in the European Union will soon have to prove that their products aren’t complicit in stripping the world of trees. The European Union Deforestation Regulation (EUDR) takes effect at the end of 2024 for large companies and in June 2025 for small and mid-sized ones. The EUDR covers seven commodities—timber, beef, palm oil, soy, coffee, cocoa, and rubber—plus certain products derived from those commodities, such as leather, chocolate, and furniture. Any company that sells a product covered by the regulation will need to: gather information on that product; assess the risk that it has contributed to deforestation; take steps to mitigate that risk; and place a statement about these efforts in an information system developed by the European Union. The information a company collects must first show that the commodity was sourced legally, and that it doesn’t involve any human rights violations. “The second part is to obtain geolocations for where your commodity was grown or harvested,” says Charles Getter, sustainability consultant at Source Intelligence, a San Diego-based firm whose software and services help supply chains comply with government regulations. “You need to be certain that
coming from, or the legality around your products,” Getter says. In addition, study the EUDR, particularly Annex I of the regulation, which lists the Harmonized Tariff Schedule (HTS) code of all commodities the law covers. It’s also important to pinpoint exactly where products were produced—where the soybeans were grown, for example, or the cattle grazed. Source Intelligence uses these geolocations, plus high- resolution satellite imagery provided by the EU, to look for signs of deforestation. “We can check for conversion of forest to agricultural land by applying designations to satellite imagery and mapping land use,” Getter says. Thanks to its automated processes, Source Intelligence can quickly conduct due diligence and risk assessment for products that originate in hundreds of locations. “We can check commodities and the legality around them, and get almost instant verdicts on whether or not deforestation was detected on that plot.”
To facilitate compliance with the EUDR, Source Intelligence offers software that identifies risks to ensure suppliers, parts, and products meet core compliance obligations and uncovers possible exposure to suppliers engaged in human rights violations.
March 2024 • Inbound Logistics 27
Powered by FlippingBook