EUDR Alert: One in Five Timber Importers Unaware of Rules!

The European Union is the world’s largest consumer market for products related to deforestation, yet despite the EU rolling out its EUDR later this year, 18% of timber importers are completely unaware and, therefore, highly exposed to massive penalties from the new regulations.

That is according to a new report published by iov42, a global blockchain company that earlier this year launched Interu—a fully traceable, “best of breed” technology solution tailor-made to monitor global deforestation, allowing users to collect, store, and share information across complex supply chains without compromising privacy. 

“And despite the rumours, 0% of the European Timber Operators we surveyed (who actually knew about the legislation) think there will be a delay in the incoming deforestation regulations,” according to iov42. The new findings, included in the 2024 Deforestation Regulation Readiness Report, involved talking to 300 operators in the UK, Belgium, Austria, France, and Italy involved in importing timber into the trade zone. 

According to Dominic von Trotha Taylor, the CEO and Chair of iov42, whilst it’s positive that many European importers are optimistic about the new legislation, “it is clear that meeting the requirements of this legislation is a huge undertaking for time-poor companies.”

The findings reveal a mixed bag of EUDR preparedness, with 27% of respondents claiming to be “fully prepared” – ranging from 44% in the UK to 24% in Belgium – with 63% convinced that the deforestation crackdown will expand their market share.

“And the results are surprising,” with more than 40% of respondents confident that they will be fully EUDR-compliant within six to twelve months of the new regulation. “We asked them about their preparedness, attitudes and concerns regarding deforestation regulations and supporting traceability solutions.”

“Traceability has become crucial to supply chain management and (therefore) compliance with incoming legislation,” iov42 said in a media statement. It added that 59% of importers have insufficient funds for traceability, leading to half of surveyed importers taking a “wait and see approach” to blockchain.

Despite this, consumer preference is the number one driver of full traceability (33%), followed by regulatory pressure (31%), market access (29%), and supply chain management (29%), followed by the environment (25%) and societal pressures (24%).

It comes as Wood Central reports that a growing amount of global opposition – fueled by Indonesia, Malaysia, the United States, India and Brazil – has led to speculation that the EUDR could be delayed or even scrapped amid global pressure.

Already, iov42’s Interu has partnered with Orbify and Double Helix to provide the forest products supply chain with real-time data and state-of-the-art supply chain management solutions compatible with the EUDR, the new UK Environment Act, and the US FOREST Act.

According to Darren Thomas, co-founder and CEO of Double Helix Tracking Technologies, “These partnerships are designed to enhance our service offerings, ensuring that our clients, big and small, meet the evolving demands of global supply chain regulations.”

“By integrating iov42’s robust blockchain solutions and Orbify’s precise geospatial analysis, we are set to revolutionise how businesses manage their supply chain and product risk,” Mr Thomas said, who last year revealed that Double Helix was working with iov42, Innovate UK and the Singapore Government to monitor timber traded into the UK supply chain.

The push to use blockchain to manage supply chains and eliminate product risks comes after a report published by the Zoological Society of London (ZSL) revealed that the top 100 pulp and paper companies were not “EUDR ready.”

The report found that just 13.3% of companies provide evidence of deforestation monitoring within their operations, 4% monitor suppliers and contractors, and 15 companies had made a public commitment to meeting requirements “that all materials due for import have not caused deforestation after December 2020.” 

According to Sam Ross, the leading author of the report and ZSL’s Sustainable Business Project Analysis, the findings highlight a fundamental need for greater readiness before the December 2024 starting point.

“If the timber industry does not rapidly enact substantial change,” Mr Ross said, “the lack of preparedness could have serious business implications.”

“The EU is a major market for many of the companies we assessed, so there is a clear financial incentive for them to take meaningful and immediate action to tackle deforestation.” 

This is supported by iov42’s new report, which states that, despite 82% of importers tracking down information for compliance, more than half have a “resource gap” which risks breeches in due diligence.

• For more information, visit Wood Central’s special feature on EUDR and its implications for the global supply chain of forest products from July 2023.