Blockchain technology emerges as key solution for EU deforestation compliance

Brazil’s pulp and paper giants are spearheading blockchain adoption to meet stringent EU deforestation rules.

Industry leader Suzano is developing proprietary distributed ledger solutions for supply chain transparency. This technological transformation comes as the sector faces mounting pressure to provide irrefutable proof of deforestation-free operations for EU market access.

The blockchain initiative represents a significant shift in how traditional industries adapt to environmental regulations. Suzano’s in-house blockchain development aims to create an immutable record of its supply chain, enabling real-time tracking of wood sources, automated compliance verification, and secure data sharing with regulatory authorities.

A statement from Suzano read: “In addition to the systems already used by the company, Suzano is developing an in-house blockchain solution, an advanced system to optimise the rapid retrieval of information and evidence to provide it to customers and authorities securely and automatically, including geolocation data and evidence of compliance.”

Industry-wide implementation

The Brazilian Tree Industry (Ibá) estimates that blockchain implementation and associated technologies could increase production costs between $40 and $230 per ton of pulp, depending on supply chain complexity. Despite these substantial investments, the industry views blockchain adoption as crucial for maintaining access to the European market, where Brazil exports 4.4 million tons of pulp annually.

EU deforestation compliance and blockchain challenges

Several critical challenges have emerged as the industry prepares for EUDR compliance:

1. Data security and management

• Lack of clear guidelines for accessing and storing commercial supply chain data
• Risk of information leakage and misuse
• Need for secure systems to handle sensitive business information

1. Risk classification process

• Concerns about the EU Commission’s engagement with local realities
• Potential for biased risk analysis affecting trade relationships
• Need for more transparent assessment criteria

1. Production traceability

• Implementation of “declaration in excess” systems to track wood sources
• Development of technology to connect compliance evidence throughout production
• Integration of existing certification systems with new EUDR requirements

Future implications and industry response

The industry’s response to EUDR requirements could set important precedents for global environmental regulations. Brazilian companies demonstrate that compliance with strict ecological standards is possible, though it requires significant investment and technological innovation.

The postponement of EUDR implementation has received mixed reactions. While Ibá supports the delay as an opportunity for “smoother and more effective implementation,” environmental experts like Paulo Barreto from Imazon warn that delays could exacerbate deforestation and climate crisis impacts.

Looking ahead

Brazil’s pulp and paper industry’s approach to EUDR compliance reflects a broader shift in how global industries adapt to environmental regulations. The sector’s investment in blockchain and other technologies suggests a future where ecological compliance and technological innovation are increasingly intertwined.

The industry’s ability to maintain competitiveness while meeting EUDR requirements will likely influence other sectors facing similar challenges. As Tina Schneider from the World Resources Institute suggests, companies should frame EUDR compliance as “a cost of doing business” in regulated markets.

(Photo by Agustin Diaz Gargiulo/Unsplash)

See also: UK set to pilot blockchain gilts in two years

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