Voluntary sustainability standards to cope with the new European Union Regulation on deforestation-free products: a gap analysis

The European Union (EU) recently introduced the EU Deforestation Regulation (EUDR) to tackle global deforestation and forest degradation, with a focus on key commodities such as cattle, cocoa, coffee, oil palm, rubber, soya, and wood. The EUDR mandates that operators exercise due diligence to ensure these commodities are deforestation-free and are produced in accordance with relevant legislation. Voluntary Sustainability Standards (VSS) have been widely adopted by commodity producers and suppliers to promote deforestation-free supply chains. The EUDR recognizes certification and other third-party verified schemes as sources of supplementary information for conducting risk assessments. However, questions persist regarding the extent to which these schemes can aid operators in assessing compliance with the EUDR. Furthermore, the existing literature offers mixed evidence regarding their effectiveness. This study addresses these concerns by developing an assessment framework to evaluate the suitability of schemes in covering the due diligence requirements outlined in the EUDR. The framework adopts a hierarchical structure, organized into 3 principles, 8 criteria, and 24 indicators. These indicators were categorized as fully covered, partially covered, not covered, or not applicable. Five prominent VSS schemes were subjected to this framework: Fairtrade International, Forest Stewardship Council (FSC), Rainforest Alliance, Roundtable on Sustainable Palm Oil (RSPO), and Round Table on Responsible Soy Association (RTRS). The study found that these schemes addressed several indicators outlined in the framework, but gaps in their coverage were evident too. Notably, the schemes lacked comprehensive measures to prevent deforestation and forest degradation. Their requirements primarily concentrated on natural forests, protected areas, high conservation values (HCV), and/or high carbon stock (HCS) forests. Moreover, the schemes permitted exceptions that allowed for deforestation and forest degradation, albeit in limited proportions. The assessment also revealed gaps in the schemes' coverage of the relevant legislation defined by the EUDR. These gaps were more pronounced in standards designed for actors along the supply chain (e.g., traders, processors etc.) compared to those aimed at producers (e.g., farmers and forest managers). Additionally, the schemes allowed for traceability systems where standard-compliant material could be mixed with conventional material. Except for FSC, the targeted VSS schemes did not enforce controls on conventional material entering their supply chains, increasing the risk of non-compliance with the EUDR. Therefore, such systems are not suitable for operators, as they increase the risk that commodities are associated with deforestation and non-compliance with legislation. Another significant observation was the schemes' use of soft mechanisms to address violations of their standards. Operators should ascertain that the verified parties supplying these commodities have not violate any requirements that could potentially lead to non-compliance with the EUDR. This study reinforces that these schemes do not serve as a guaranteed path to compliance with the EUDR. Therefore, operators are obligated to establish a robust due diligence system capable of fulfilling all appliable requirements. Nevertheless, schemes can still offer substantial assistance by providing on-the-ground information supported by an assurance system. For this, operators must devise strategies to address the gaps and challenges identified in this study.