Fulfilling the requirements of the European Union’s Regulation on deforestation-free products with 4C
On June 29, 2023, the EU regulation on deforestation-free products entered into force. The regulation introduced new legal requirements aimed at combating deforestation and ensuring the legality of imports. It is the intention of this regulation to address global deforestation and promote sustainable practices in various commodity markets, including coffee. As a major economy and consumer of commodities linked to deforestation and forest degradation, the EU is partly responsible for this problem and wants to lead the way to solving it. By enforcing stringent standards that discourage deforestation, protect biodiversity, and uphold the rights of local communities, the EU intends to foster transparency, traceability, and responsible sourcing practices.
The Requirements of the EU DR
Under the Regulation, any operator or trader who places various commodities incl. coffee on the EU market, or exports from it, must be able to prove that the products do not originate from recently deforested land or have contributed to forest degradation. Economic operators have 18 months to implement the new requirements, starting from June 29, 2023.
It is expected that roasters and traders will require producers to provide evidence of compliance with the new regulation already today or in the very near future. Becoming effective by the end of 2024, it is anticipated that traders and roasters will soon require evidence of compliance with the new legal requirements.
To export coffee to the EU, the following must be demonstrated:
- Implementation of deforestation-free practices
- Legitimacy of operations
- Traceability along the supply chain
Evidence must be provided regarding no deforestation and legality which will be part of a risk assessment to be carried out. Risk factors have to be evaluated and weighted in the risk assessment, and, if required, risk mitigation measures must be implemented (e.g. continuous monitoring in case of high deforestation risk). Traceability along the supply chain must be ensured. Mass balance is not allowed. “EU coffee” must be segregated in the supply chain. Based on this, a Due Diligence Statement can be issued which would allow import and trade of green coffee beans in the EU.
For farms larger than 4 hectares, detailed polygons of their production areas will be mandatory. Smaller farms, however, will only need to provide a single data point, such as the location of the farmhouse. To ensure compliance, GRAS, 4C’s sister company, utilizes remote sensing data from the EU’s Copernicus satellite program (mentioned in the EU Regulation) to analyze all submitted polygons, verifying that no deforestation occurred after the cut-off date of December 31, 2020. The findings are compiled into a comprehensive report which can be used to document compliance with the new regulation and as a basis for a Due Diligence Statement.
About GRAS – Global Risk Assessment Services
GRAS is a comprehensive solution to implement and monitor sustainable and deforestation-free supply chains by the verification of compliance of relevant sustainability criteria using the latest remote sensing technologies. GRAS provides reliable information on ecological and social risks related to biomass of agricultural or forestry origin.
4C offers a solution
The EU Regulation recognizes certification or other third-party verified schemes to be used in the risk assessment procedure.
4C certification in combination with the geo-analytics from our partner organization Global Risk Assessment Services (GRAS) provides tailor-made solutions to EU importing operators and their suppliers. Using the available tools of risk assessments for deforestation and land use change by satellite image interpretation combined with additional data sourcing on national legislation, human rights statistics, claims by indigenous peoples, corruption index and law enforcement, conflicts on lands on the one hand and the on-the-ground experience from 4C certification and third-party verification on the other, are the backbone to build a strong due diligence case. Using the existing 4C Portal for uploading and replicating the coffee flow including all relevant actors through the supply chain will allow to demonstrate traceability adequately. Relevant documentation on ‘deforestation-free’ production can be attached to the coffee flow information.
4C covers the three-step approach
Step 1 Data Collection:
- 4C, through its integration of GRAS, provides the tools to collect geo-coordinates of the production areas (polygons and coordinates), farmer IDs, and the avenue to upload and forward any related legal documents to provide evidence on tenure and land use rights.
- Database to upload geo-information and related documents and checks on deforestation related to coffee production per coffee plot by comparing coffee plots with deforestation maps in a spatial geo analytic process.
Step 2 Risk Analysis:
- Service to in-depth analysis of the deforestation risk per coffee plot and to send an immediate alert to the coffee managing entity to verify deforestation on farmlands of their coffee producing members. In case of a match, the respective coffee production area will be excluded from the group of EU coffee producers prior to including harvested coffee into the supply chain.
- Verification tools for checking on national legal requirements, described in the EUDR and mitigate the risk through third party auditing.
Step 3 Risk Mitigation:
- The 4C Certification System provides the basis for risk mitigation through regular audits as well as continuous monitoring and reporting though the 4C Portal.
4C system provides traceability through the entire supply chain
- 4C provides the traceability platform to receive information on coffee, being inserted into the platform from the moment of sales of coffee from the Managing Entity, with all relevant information of geo coordinates and producer IDs, date of production (harvesting date) and amounts per coffee plot for further sales and purchasing of coffee through the entire supply chain until the moment of entering the EU. Here, a report can be extracted with all relevant data to cover the due diligence statement for the EU importing operator. The same level of information can also be provided in case of any export from the EU after to third countries.
- 4C and GRAS provide the data storage system for 5 years storing relevant data on each batch of coffee entering or exiting the EU.