New survey from iov42 gives a unique insight into the preparedness, attitudes and fears of those most affected by deforestation regulations.
London, 30 April 2024 – New research from iov42, a technology company specialising in digital identity, trust, and data integrity has revealed that almost one in five (18%) European timber importers are not aware of any incoming deforestation legislation, despite the fact that regulations like the EU Deforestation Regulation (EUDR) and UK Environment Act will imminently become law.
Despite the uncertainty around deforestation regulation timings, more than a quarter (27%) of respondents claim to be fully prepared, although there is a marked difference in levels of preparedness from country to country. 44% of UK respondents feel somewhat prepared, whereas in Belgium almost a quarter (24%) have not even commenced preparations.
iov42’s 2024 Deforestation Regulation Readiness Survey is based on responses from those with active involvement in importing timber and related commodities in the UK, Germany, France, Belgium, Austria, and Italy. All of whom will be or are affected by existing and incoming regulation designed to combat deforestation, one of the biggest environmental challenges of our time, significantly contributing to climate change, biodiversity loss, and disruptions in indigenous communities.
Market uncertainty hindering innovation
Traceability has become crucial to supply chain management and compliance with incoming legislation, ensuring organisations can prove the goods they bring to market have been obtained from sources with zero deforestation. Improved traceability is enabled by specialist technology to collect, analyse, verify, store, manage and securely share supply chain information.
The survey reveals that over half of respondents (51%) have said they prefer to see what others in the market are doing before they adopt traceability systems or solutions. This is despite half of respondents saying they believe better traceability is beneficial for the industry at large and for their organisation in particular.
A notable 58% of respondents indicate that their suppliers are either unwilling or unable to support their efforts towards enhanced traceability, with almost three in five (59%) of organisations reporting insufficient funds to implement necessary traceability solutions.
Optimism is in the air
Despite some uncertainty, 40% are still planning to achieve compliance within 6-12 months of the regulation being enforced.
The survey has also uncovered a great deal of positive sentiment towards deforestation legislation. A significant majority (59%), agree that adhering to regulatory requirements will bolster their customer base, while 54% foresee a positive impact on their profits. Almost two thirds (63%) also anticipate that compliance will expand their market share.
Half of all respondents believe that full traceability would notably enhance their organisation’s growth. Additionally, 53% acknowledge that sourcing timber would be significantly streamlined through the adoption of traceability systems. This sentiment is echoed by 51% of organisations surveyed who said they were eager to implement traceability solutions, underlining a widespread acknowledgment of their benefits.
Consumer pressure is no.1 driver for increased traceability
Despite the imminence of regulation and the need for compliance, consumer pressure was cited as the single biggest driver towards increased traceability with one third (33%) of respondents saying this was their biggest influence. This was followed by regulatory pressure (31%), market access (29%) and the need to combat disrupted supply chains (29%). The environment (25%) and social impact (24%) were the least pressing drivers with a quarter of respondents citing these as their biggest influences.
Time challenges
Over four fifths (82%) of organisations report dedicating half or more of their operational time to tracking down information for customers, a figure that rises to 90% within the UK.
The absence of a dedicated team to manage compliance exacerbates this issue, with over half (52%) of organisations acknowledging this gap. Over a quarter (26%) of respondents cite the lack of time and/or resources as the primary barrier to adopting traceability solutions, which could significantly mitigate the burden of customer information requests.
Implementing traceability solutions not only means less time needs to be dedicated to the collection, storage, and sharing of due diligence information but also enhances security and efficiency, particularly for organisations without specialised compliance teams.
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Dominic von Trotha Taylor, CEO and Chairman at iov42 said, “The 2024 Deforestation Regulation Readiness Survey from iov42 gives a unique insight into the mindsets of those most affected by incoming deforestation regulations. These ambitious legislative frameworks all place stringent due diligence and traceability requirements on affected companies, so it is positive to see that European Operators are optimistic about the benefits regulation and traceability can bring. It is clear, however, that meeting the requirements of these regulations is a huge undertaking for time-poor companies, but help is out there, notably from a range of best-of-breed technology solutions working together to help collect, analyse, verify, store, manage and securely share data.”
About iov42
iov42 is a technology company specialising in digital identity, trust, and data integrity. Our purpose built technology helps organisations, governments and societies coordinate confidently by enabling proven, transparent and secure transactions in a decentralised and immutable manner. Launched in February 2024, iov42’s traceability product, Interu, demonstrates how the fundamentals of this technology can be applied to enhance traceability across a range of commodities, countries, and use cases.
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