Compliance or consequence: how can corporates build resilience under incoming regulation?

As compliance becomes crucial, the agricultural sector must embrace sustainability to meet regulatory demands

On Tuesday, September 24th, Innovation Forum hosted a webinar focusing on the evolving regulatory landscape impacting commodity supply chains, particularly the EU Deforestation Regulation (EUDR), the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD).

The discussion highlighted the complexities and opportunities presented by the evolving regulatory environment. They emphasised the need for proactive engagement, collaboration, and innovative approaches to data management to achieve sustainable transformation in commodity supply chains. As businesses prepare for the implementation of these regulations, the focus remains on fostering transparency, accountability, and responsible sourcing practices to navigate the challenges ahead.

There was a strong focus on the implications of these regulations for businesses, the challenges they present, and the opportunities for sustainable transformation within the food and agriculture sectors. The panellists highlighted the importance of collaboration, data transparency, and proactive engagement among stakeholders to navigate the complexities of regulatory compliance.

To follow is a summary of the key points, challenges and solutions discussed.

Regulatory compliance and stakeholder engagement
Challenges

The EUDR applies to all companies involved in specific commodities, raising concerns about compliance timelines and bureaucratic burdens.
There is significant uncertainty regarding the EU’s readiness, particularly around benchmarking and IT systems needed for compliance.
Diverse stakeholder interests create complexities with governments, industry associations, and NGOs, expressing varying levels of concern about the regulations' impact.

Opportunities

The regulations provide a framework for enhanced transparency and traceability in supply chains, fostering trust among consumers and businesses.
Companies are encouraged to begin preparations for compliance and get ahead of the curve, leveraging existing sustainability programs to meet upcoming regulatory requirements.
Collaboration among stakeholders can facilitate the sharing of best practices and innovative solutions to address compliance challenges.

Data management and verification
Challenges

Ensuring data accuracy and reliability is critical, especially when sourcing from complex jurisdictions such as China.
Businesses face difficulties in verifying the data collected from suppliers, which can lead to risks in compliance and reporting.

Opportunities

Utilising local experts and open-source intelligence can enhance data verification processes.
Third-party verification of sustainability data can improve transparency and accountability, as demonstrated by Tony’s Chocolonely’s approach to annual reporting.

Empowering smallholder farmers
Challenges

Smallholder farmers may lack motivation, funds and resources to participate in data collection efforts, necessitating incentives to engage them effectively.
Survey fatigue from repeated data requests can decrease willingness among suppliers to provide necessary information.

Opportunities

Equipping farmers with offline solutions can facilitate data sharing and improve engagement.
Implementing compensation schemes for farmers who provide data can encourage participation and enhance the quality of information collected.

Collaboration and standardization in supply chains
Challenges

Achieving transformative sectoral change requires collaboration across various stakeholders, which can be difficult to coordinate.
Inconsistent methodologies and standards for data collection hinder comparability and integration across supply chains.

Opportunities

Partnerships among stakeholders are essential for meeting regulatory demands and driving positive change.
Industry collaboration on data standards can enhance consistency and facilitate effective sustainability measures, ultimately building trust and managing risks.

Webinar panel

Belinda Borck, global public policy coordinator, Tony’s Open Chain
Pallavi Sharma, agricultural commodities sector lead, Global Rights Compliance
Felipe Carazao, head of public sector engagement & alliance management, Tropical Forest Aliance

This webinar was organised in the lead up to the Sustainable Commodities and Land Use Forum (Amsterdam, 22-23 October). Click here for information on how to get involved.