The urgency of compliance with the European Union Deforestation Regulation (EUDR) by December 30, 2025, cannot be overstated. Companies in the pulp and paper industry must take immediate steps to ensure their products do not contribute to deforestation. Failure to meet these requirements could result in not only market access issues but also penalties that could severely impact operational viability.
Understanding the EUDR
What is EUDR?
The European Union Deforestation Regulation aims to prevent deforestation. The regulation mandates that operators and traders verify their supply chains to ensure that products do not come from deforested land or contribute to forest degradation. This initiative is part of a broader effort to reduce environmental impact and promote sustainability in industries heavily reliant on natural resources.
The regulation covers a range of commodities, including wood fiber, pulp, paper, and related products. To ensure compliance, companies must engage in rigorous due diligence processes. This means that every company dealing in these commodities must prove their products’ origins and ensure they comply with the EUDR’s stringent criteria. Non-compliant products will be barred from sale and export within the EU, posing significant risks to businesses that fail to adapt.
Compliance Requirements
To meet EUDR requirements, companies must use Due Diligence Statements (DDS) registered in the EU’s TRACES system. Every production batch necessitates a DDS Reference Number (DDRN), which must be subsequently shared with subsequent operators or traders down the supply chain. This process ensures that every step of the supply chain is transparent and traceable, reducing the risk of illegal deforestation.
The TRACES system serves as a centralized platform capturing detailed logs of DDS registrations, facilitating robust monitoring and enforcement. This regulatory infrastructure mandates meticulous record-keeping and documentation, posing considerable operational challenges, particularly for companies lacking automated systems. Accurate, timely compliance is paramount to avoid sanctions and ensure continued market access.
Deadline Extension
Initial Deadline
Originally set for the end of 2024, the EUDR compliance deadline has been extended to December 30, 2025. Despite this extension, many companies are still lagging in their preparedness. The initial deadline aimed to prompt early preparations, reflecting the immense logistical and operational adjustments required. However, the extension has not alleviated the urgency for companies yet to initiate comprehensive compliance strategies.
Even with additional time, the complexity of achieving compliance cannot be underestimated. Fulfilling EUDR obligations involves integrating new technologies, revising supply chain protocols, and training staff on new regulatory procedures. Companies delaying these investments risk significant operational disruptions as the deadline draws near, underscoring the critical need for immediate action.
Affected Mills
The regulation impacts all mills using virgin fiber, excluding those using 100% recycled fiber or bamboo. Hundreds of mills within and outside the EU fall under the EUDR’s purview, including suppliers dispersed globally. The regulatory scope necessitates that mills trace their raw materials’ origins with unprecedented precision, verifying compliance at every supply chain level.
For operators in the EU and those exporting to the EU, the stakes are particularly high. Failing to meet the EUDR standards could result in a loss of market access, significantly impacting revenue streams and business sustainability. Therefore, a comprehensive approach to compliance, encompassing technology solutions, strategic partnerships, and robust training programs, is indispensable.
The Need for Automation
Manual Process Impracticality
Manual DDS registration is impractical for medium-to-large mills due to the significant workload involved. The volume of documentation, coupled with the need for stringent accuracy, makes manual processes unfeasible. Handling these tasks manually would require an extensive workforce and could easily result in errors, leading to compliance failures and potential penalties.
Given the scale and complexity of the tasks involved, automation is the only viable solution for efficient compliance management. Automated systems can handle large volumes of data accurately and quickly, ensuring that companies remain compliant with minimal manual intervention. These systems can also provide real-time updates and alerts, allowing for timely corrective actions when needed.
Automated Solutions
Tietoevry’s TIPS Manufacturing Execution System (MES) offers an EUDR module specifically designed for the pulp, paper, and fiber industries. The module integrates seamlessly with existing IT infrastructures, automating necessary data transfers and compliance processes. This targeted approach ensures that industry-specific challenges are effectively addressed, providing tailored solutions that align with operational workflows.
The EUDR module within TIPS can be integrated with various MES systems using standard APIs for data integration, ensuring compatibility and wide applicability. This automated solution systematically tracks and transfers DDS data, ensuring rigorous compliance and reducing the risk of human error. By minimizing manual documentation efforts, the system can save considerable time and resources, allowing companies to focus on core operational activities.
Integrating TIPS EUDR Module
Compatibility and Integration
The TIPS EUDR module uses standard APIs for data integration, making it compatible with various MES systems. This flexibility ensures that mills can incorporate the module without overhauling their existing IT infrastructure, reducing implementation time and costs. The module ensures systematic traceability of incoming DDRNs throughout the production process, maintaining accuracy and compliance.
This system of integration enables mills to streamline their operational processes, enhancing productivity and efficiency. Automated workflows ensure that compliance-related data is accurately tracked and recorded, allowing mills to provide verifiable documentation during audits. By leveraging technology, mills can effectively manage EUDR requirements, ensuring seamless compliance operations.
Operational Efficiency
The module automates data transfer between fiber suppliers, the MES, the TRACES system, and ERP. It proficiently manages exceptions and alerts key users via email for timely troubleshooting and resolution. This automation significantly reduces the operational burden and enables proactive management of compliance issues. Automated alerts help in rapid identification and rectification of discrepancies, ensuring continuity and compliance.
The module’s ability to manage exceptions and generate timely alerts is crucial for maintaining smooth operations. These automated features enable proactive troubleshooting, allowing teams to address issues before they escalate into significant problems. By effectively managing compliance data, mills can ensure adherence to EUDR standards while optimizing their operational processes.
Strategic Approaches
In-House Development Challenges
Building an in-house system for EUDR compliance presents significant challenges. Developing such a system is time-consuming and costly, with high risks of budget overruns and delays. Given the complex regulatory environment and the need for specialized expertise, many companies may find it challenging to develop a functional system within the compliance deadline. In-house systems also require ongoing maintenance and updates, adding to the long-term costs and resource allocation.
In contrast, utilizing ready-made solutions like Tietoevry’s TIPS EUDR module mitigates these risks. The module is designed specifically for the pulp and paper industry, ensuring that all unique regulatory requirements are met. Companies can quickly implement this solution, allowing ample time for integration, ramp-up, and staff training. This approach reduces the risk of non-compliance and ensures that companies are prepared well before the deadline.
Benefits of TIPS EUDR Module
The TIPS module provides industry-specific features tailored to the pulp and paper sector. It ensures compliance from day one and offers a scalable, long-term solution that can adapt to evolving regulations. Built using a SaaS-style development architecture, the module is compatible with Oracle or SQL Server, ensuring durability and continuous development. This long-term viability makes the TIPS EUDR module an ideal choice for mills planning to maintain regulatory compliance over extended periods.
The module’s scalability allows it to accommodate the evolving needs of the pulp and paper industry, ensuring that mills remain compliant as regulations change. Ongoing updates and support from Tietoevry ensure that the module remains aligned with current regulatory standards, providing a reliable compliance solution. By adopting the TIPS EUDR module, companies can focus on their core operations, confident in their compliance with EUDR requirements.
Immediate Action Needed
Acting Swiftly
The consequences of non-compliance are severe, including the inability to sell non-compliant goods within or export them from the EU. Mills must act quickly to adopt automated solutions like Tietoevry’s TIPS EUDR module. Swift action is essential to ensure that all systems are in place, staff are trained, and operations are fully compliant before the deadline. Delaying these steps could lead to significant operational disruptions and loss of market access.
Automated systems help maintain regulatory compliance efficiently, preventing potential disruptions in operations and market access. Implementing an automated solution also ensures continuous monitoring and compliance, reducing the risk of accidental lapses. Companies that act promptly and adopt automated solutions will be well-prepared to meet the EUDR requirements and avoid the severe consequences of non-compliance.
Ensuring Market Access
The urgency to comply with the European Union Deforestation Regulation (EUDR) by December 30, 2025, is critical. Companies in the pulp and paper industry are under significant pressure to act quickly in ensuring that their products do not contribute to deforestation. The importance of this compliance cannot be overstated, as failure to meet these requirements could lead to severe consequences. These include not only market access issues but also substantial penalties that could jeopardize the operational viability of these companies. The regulations have been put in place to address the growing concerns about deforestation and its impact on climate change and biodiversity loss, which makes this compliance not just a legal obligation but also a moral one. This means adapting supply chains, verifying sourcing practices, and implementing sustainable forestry practices. The window for action is rapidly closing, and companies must prioritize efforts to conform with EUDR standards to avoid disastrous economic repercussions and contribute positively to environmental conservation efforts.
