With new legislations like the EU Deforestation Regulation (EUDR) demanding more transparency from businesses about their supply chain(s), fears are mounting that some global suppliers will simply be cut out of the equation.
This is because if a business wants to trade a forest-risk commodity (including timber, soya, palm oil, coffee, cocoa, natural rubber, beef or leather) into or from the EU, they are now required to be able to trace that commodity beyond their immediate supplier and back to source (at geocoordinate level) to prove they aren’t contributing towards deforestation.
However, a study by iov42 found that 56% of timber importers across Europe fear that increased traceability will give away trade secrets. This has since resulted in large traders telling us that due to suppliers refusing to provide this new level of due diligence information, they have had to end their relationship and only source from companies who will.
How then, can businesses meet these new requirements without their suppliers fearing they will give away commercially sensitive information and cutting ties? Improved traceability to end deforestation should not impact businesses which have spent years building up positive supplier relationships and international trade.
But how can they do it? Emerging solutions built using decentralised-ledger-technology (DLT) are designed to not only put trust back into the core of businesses, government and society, but also to encourage positive (and fair) global trade.
To help with this, iov42 has built a permissioned approach that only grants access to those who need it (and within that, only shows the information within that document that is required. e.g the geolocation coordinates of timber to meet EUDR requirements, but not the price they paid the forest owner for it). This results in the supplier being able to increase their traceability to help importers meet regulation, without compromising privacy.
We believe traceability should be seen as a business advantage and not something to be feared. Beyond regulation, it can boost efficiency, increase market access and cut time and costs (among other areas). So we encourage organisations to get ahead of traceability requirements linked to regulation and look to improve it anyway. It is worth the hype, and it certainly isn’t worth being cut out of the supply chain for.
Get in touch to learn how we can help you maintain relationships with your suppliers, all whilst meeting regulation requirements.