Allison Kopf, CEO of Tract – an agtech firm that provides businesses with sustainability measurement technology – urges companies within the EU’s plant-based food and beverage industry to prepare for the Regulation on Deforestation-free products (EUDR) compliance deadline later this year. She discusses how the new laws will impact alt-meat companies big and small, presenting challenges for the industry alongside opportunities to transform the landscape of responsible sourcing across the supply chain.

This summer in the UK, millions of people are expected to experience the intense effects of the climate crisis. Scientists have predicted that 2024’s summer will almost certainly be the hottest or second-hottest year on record. There is no denying the devastating impact of the global environmental crisis.

Deforestation plays a major role in contributing to climate change. Healthy forests act as a carbon sink, absorbing more carbon than they release, whereas degraded and deforested areas release stored carbon into the atmosphere.

It is currently estimated that 13-16% of the deforestation associated with global trade is linked to products imported into the European Union – an amount equal to around 203,000 hectares of forest destruction. Soy, cocoa and palm oil are some of the biggest culprits.

The European Union aims to reshape this statistic with its Regulation on Deforestation-free products (the EUDR). In response, food and beverage companies across the world must prepare for a monumental change in the way they import products into – and export products from – the European Union.

The compliance deadline for the EUDR is 30 December 2024. After that, the EU will regulate any company that sources certain commodities, including several ingredients that are at the core of the food and beverage industry.

The EUDR will require companies to prove their imports or exports of products containing these commodities are ‘deforestation-free,’ meaning no forest was cleared or degraded after 2020 to grow or produce any part of the product. EUDR is intended to change the dynamics of the supply chain and create a new standard of environmental due diligence and responsibility.

Companies that import or export soy, cocoa, palm oil, coffee (as well as cattle, wood and rubber) into the EU – from anywhere in the world – or export from the EU, will have to implement a new system of sustainability oversight. Companies must also prove they don’t breach any pre-existing environmental or social laws.

And the EU is implementing significant penalties for non-compliance. These can include fines up to 4% of company turnover, as well as the confiscation of products and the potential temporary exclusion from access to public funding.

Getting ready for such rigorous tracking of food sources is complex, and there are few systems already in place that companies can utilise to comply with the new rules. Preparation for the new due diligence requirement is an enormous undertaking, and there are specific considerations for plant-based food and beverage companies.

For a bigger meat alternative company importing soy or oil products from several different sources across the world, having multiple supply chains is not easy or always immediately available to analyse. The outcome of any analysis may mean the company chooses to rebalance its procurement, based on the compliance of suppliers.

Smaller plant-based food or beverage companies face a different challenge, as a smaller output does not necessarily mean a less complex compliance process. This means that proving their supply chain is free from deforestation may be heavily burdensome.

For companies operating at a smaller scale, the impact in both time and resources to prove raw materials are compliant, or to find new compliant sources, is likely to be very challenging. Companies who provide a single product – for example, single-origin coffee – may have a simpler time, but will also face problems if they find out too late that a supplier is not EUDR-approved.

With eight months to go until the compliance deadline, companies are hard at work preparing. But the deadline is looming, and it’s clear that this is a monumental task. Fully complying with EUDR will be a significant challenge for many. Strong preparation is key, as the regulation will have a wide net and non-compliance carries the risk of a ban on EU sales.

There are companies working to build systems that will support businesses in their due diligence, by tracking supply chains in order to gather information alongside providing risk assessment and mitigation guidance. Even with this support, each company will need to be fully aware of their obligations and understand the new commitments they must adhere to.

Preparing for the EUDR December deadline can feel overwhelming, but there are companies who are here to help. If your company is struggling to understand its obligations under EUDR or is worried about meeting the deadline, the time is now to start finding a solution.

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