Earlier this year, the EU’s Regulation on deforestation-free products (EUDR) was announced, coming into full effect by 2024. Under this new regulation, all EU operators and traders that place any of the seven key commodities (or products containing them) on the EU market or for export must prove that the products are not linked to forest degradation nor come from recently deforested land. Eligible companies will be required to implement due diligence systems including:
- Geolocation of all plots of land where relevant commodities are produced
- Conclusive and verifiable information that the relevant commodities are deforestation free
- Conclusive and verifiable information that the relevant commodities have been produced in accordance with relevant local laws (for example, that they are not produced in areas that are prohibited for agricultural use)
In the UK, there is similar legislation that has just been passed. The UK Environment Act will make it illegal for large UK organisations to use any forest risk commodities that have been produced on land that is protected – such as national parks. These companies will also need to implement a due diligence system throughout their supply chains in order to comply.
Complexities and Barriers
The due diligence systems that organisations will need to implement and demonstrate are complex and far-reaching. Monitoring the data and unveiling the precise history of a business’ supply chains is no small feat, frequently being done using data from satellites. This can leave lots of room for error and it is of primordial importance to understand the sources and implications of two types of error in particular:
Type 1 Error (False Alarms)
In the case of deforestation monitoring, false alarms can be triggered by various phenomena. These include seasonal changes to vegetation, the harvesting or thinning of trees as part of ongoing management of forests/agroforestry systems and the misclassification of an underlying reference map (common if a farm area contains plantation crops or bushes).
The potential implications of type 1 errors include the false attribution of deforestation to innocent producers, leading to negative effects on their standing as suppliers and their credit rating, which can be especially devastating to smaller producers. Another implication can include increased time wasted on manually checking large numbers of alerts via time-consuming farm visits.
Type 2 Error (Missed Detections)
Forest conversion to other uses can be missed where observations are obscured by cloud cover (optical sensor) or in steep terrain (radar sensor) or where there is a lot of background noise, such as seasonal variation or rapid regrowth of disturbed vegetation.
The main implication of type 2 errors is a failure to comply with the regulation and the impacts of the supply chain being associated with deforestation that is not detected as soon as reasonably practicable.
In general, both types of errors are poorly constrained in supply areas where the growers are:
- Smallholder farmers with a patchwork of small fields
- Producers are using agroforestry systems (trees interspersed with crops, or grown as a shade canopy)
- Where there is a high level of cloud cover for much of the year and in areas of steep slopes
Reliance of a compliance system on global, freely available forest change products will generally increase the risk of both types of errors. Where high fidelity, nationally approved vegetation and land use maps are available, these should be used to provide context.
How Ecometrica can help
The Ecometrica Forest Due Diligence product can rapidly analyse global supply chains covering hundreds of thousands of farms to red flag potential linkages to deforestation. To ensure organisations will be able to comply with the new regulations, Ecometrica provides high quality, super contextual and authoritative data via enhanced low-lying land international maps; including Ghana, Brazil, Colombia, Mexico, Indonesia, and more.
Ecometrica’s data is authorised by national authorities, which in turn minimises errors of potentially missing deforestation or falsely accusing a local producer of deforestation. Our network of partners, which include governments and third-party commercial content providers, means we use authoritative data for analysis.
Watch our joint webinar with CDP where we focus on the regulatory design of the EUDR and highlight the due diligence obligations of companies. We also demonstrate the importance of using reliable and authoritative data to monitor supply chains to avoid mistakes.
Watch the webinar below.