Ahead of the European Parliament voting on the proposal to delay its landmark anti-deforestation law by a year today, attendees at the Roundtable for Sustainable Palm Oil (RSPO) bemoaned the slow rollout of the European Union (EU)’s digital compliance portal.
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On the sidelines of the annual roundtable conference held in Bangkok, growers and traceability platforms expressed frustration that registration for the European Union Deforestation Regulation (EUDR)’s portal, known as the Traces system, only opened last week – six weeks before the law was meant to take effect.
While industry lobbying from major commodity-producing countries, like Indonesia and Malaysia, has been blamed for the proposed EUDR delay, some have pointed to the EU’s lag in providing clear guidance for using the Traces system.
“It’s a shitshow,” said one delegate who handles the communications for multiple palm oil growers and distributors. A senior executive of the largest exporters of RSPO-certified palm oil said that though his company can start registering, it cannot access the platform until 1 December.
“If you don’t use a solution that’s able to submit your due diligence statement for you and want to do it manually, it can be a huge problem because someone has to set up your processes. In no scenario is it good that you have so little time to test it,” said Andreas Naujoks of LiveEO, a Berlin-based startup using satellite and drone data to help firms comply with the regulation.
But a bigger problem, Naujoks said, is that most of the available data sets on forest maps are very inaccurate, meaning that even if the areas where products originate from get mapped out, deforestation could be wrongly flagged and lead to the exclusion of a supplier or non-compliance, which are both costly.
“Imagine if you have a rubber plantation or a palm oil plantation, you cut back the trees at the end of a cycle and you replant them. But even though you had agriculture before and afterwards, it shows up as deforestation,” said Naujoks, referencing the EU’s definition of deforestation, which looks at the conversion of forests to agricultural land.
This differs from the RSPO’s definition after its new standards passed on Wednesday, which environmental groups like Rainforest Action Network have denounced as “flawed” due to the dropping of its reference to the no deforestation standard under the High Carbon Stock Approach toolkit.
There are also concerns now that the EUDR could be weakened from within, on the back of proposed further amendments by the European People’s Party last week, including calls for a two-year delay, the exclusion of large traders from nearly all obligations and the introduction a new category of “no risk” countries.
When it was first announced, the EUDR’s high penalties for non-compliance – up to 4 per cent of a company’s annual turnover – placed pressure on large exporters of commodities like palm oil, natural rubber and timber, to invest in weeding out deforestation from their supply chains.
Many supply chain management platforms have therefore introduced new offerings in the past two years to meet the demand from companies looking to be EUDR compliant.
The regulation requires producers to submit satellite data about the origins of goods entering the EU market to prove that they were not grown on land deforested after December 2020 or in illegal areas, which can potentially be retrieved from existing platforms that businesses are using.
Gerald Tan, chief executive officer of Agridence, a Singapore-based agri-commodity traceability platform – which has been tapped to build RSPO’s new digital compliance system Prisma – told Eco-Business that the EU has been “a bit silent” on its rollout plan and there remains a lack of guidance on how to use Traces, including the limits to the amount of data that can be uploaded and the number of geospatial data sets required.
Tan’s team was invited to test the Traces system out in January, where they flagged that there was no application programming interface (API) to automate the syncing of data across existing platforms, like Agridence.
“Originally, there was no API, so there was a big push back. To give credit to the EU, they actually sped up the process of opening an API connection so we can push the information onto Traces, which shows they are listening to industry feedback,” he said.
The system currently fails to provide reasons for why certain data gets rejected and what needs to be corrected, which platforms like Agridence provide for their clients, he added. A key misunderstanding, Tan said, is that if a firm’s data gets accepted by Traces, it is EUDR compliant.
“All it means is that the data format is compliant, not that your product is compliant,” he said.
Under the EUDR, records of firms’ due diligence activities must be kept on the system for at least five years for regulators to audit any commodities exported to the EU. “High-risk countries” – which has not been clearly defined – are subjected to enhanced scrutiny, where 9 per cent of operations will be subjected to random inspections, compared to 3 per cent in “standard-risk countries”.
“The implementation guidance was not clear enough until a week ago, when they released the new instructions on how to use the system. They have training sessions scheduled now until the end of the year, but they may have left it a little bit too late,” said Tan.
Eco-Business’ access to the Roundtable Conference on Sustainable Palm Oil 2024, as well as the sponsored trip to Bangkok was facilitated by RSPO.
