Coffees-Regulatory-Blend
Coffees-Regulatory-Blend
Regulatory
Blend
Executive Summary — 2
Introduction: Regulation is here to stay — 3
Part One: A changing regulatory environment — 5
Part Two: The coffee sector’s insufficient response — 12
Part Three: Recommendations and challenges — 17
Part Four: The way forward — 20
Endnotes — 21
Colophon — 23
Regulation
is here to stay
Climate change poses a major threat to producers and consumers alike. Coffee is a driver for
deforestation in many of the world’s existing rainforests.1 Monoculture often dominates over
agroforestry. Hazardous chemicals are widely used, and effluents are poorly controlled. Labour
rights and human rights violations are endemic throughout many coffee regions.
The situation is made even worse by the widespread poverty among millions of coffee farmers
worldwide. At the same time, there are enormous expectations placed on these small-scale
farmers. When it comes to sustainability, the burden—often almost all of it—rests heavily on
these farmers, while regulators and the wider industry largely avoid taking their fair share of
responsibility. This needs to change.
A welcome change
Sustainability regulations and requirements in agricultural commodity supply chains are evol
ving rapidly, shifting from voluntary sustainability programmes to mandatory legal compliance.
This regulatory shift is welcome and long-overdue, creating a level-playing field to prioritize
the protection of human rights and prevent environmental degradation.
This shift is necessary, as voluntary sustainability efforts have largely failed to drive significant
sustainability impact in the global coffee sector. The new regulatory landscape requires the cof-
fee sector to adapt and learn to operate within it. Changes will have to be made. Both private
sector companies and governments must quickly address these challenges.
A clear picture
The coffee sector needs a clear understanding of the benefits of regulatory changes and the
harms of maintaining business as usual when it comes to farmer poverty, labour abuse, defor-
estation, and monoculture.
Embracing this new normal – where sustainability is no longer voluntary – is essential for
3 the industry. Sustainability regulations are here to stay and will be a driving force in driving
systemic sector transformation going forward.
About this compendium
This compendium outlines the major regulatory changes, debunks key misconceptions, and
highlights some of the main challenges and implementation concerns.
One of the aims is to provide an overview and improve understanding of the regulatory dy-
namics, amid widespread disinformation and uncertainty around the regulation, while sup-
porting all stakeholders in the coffee sector in adapting to and embracing these changes. As
such, part of this document is directed at the coffee industry and governments of producing
countries.
Another goal is to provide a unified message from civil society actors on key issues facing the
coffee sector. In this sense, the document serves as a clear outline on the future direction of
the sustainability debate in coffee, encouraging a more in-depth dialogue between the indus-
try, governments of producing countries, the European Union, and other interested parties.
KEY MESSAGES
• Effective regulations are vital for creating a level playing field, but their
success relies on reliable regulators who offer clear guidance and support,
currently a significant shortcoming of the EU.
4
PART ONE
A changing
regulatory
environment
The current changing regulatory environment exists within a broader global context, which en-
compasses legally binding treaties such as the Paris Agreement, and soft law instruments such
as the UN Sustainable Development Goals (SDGs), the 2011 UN Guiding Principles on Busi-
ness & Human Rights, and the OECD Guidelines for Multinational Enterprises on Responsible
Business Conduct. Although many companies have taken steps in addressing human rights
over the past decade, the persistent lack of progress toward an economically and ecologically
just and equitable system has led policymakers to move toward mandatory legislation.
Over the past few years, the European Union has been leading a global shift with
ground-breaking legislation requiring due diligence on human rights and environmental
impacts in commodity supply chains.2 This is exemplified by the EU Regulation on Defores
tation (EUDR, adopted in June 2023) and the Corporate Sustainability Due Diligence Directive
(CSDDD, adopted in May 2024), and requiring transparent accuracy in reporting and market-
ing, exemplified by the Corporate Sustainability Reporting Directive (CSRD, adopted in
January 2023) and the Green Claims Directive (currently in development).3
Although the EUDR and the CSDDD have been watered down in the legislative process in
Brussels, as a whole these regulations together form a solid suite of requirements on environ-
mental sustainability and human rights and will also require companies to be far more transpar-
ent in their public reporting and in their sustainability claims.
Furthermore, national sustainability regulations are also emerging in EU countries and beyond,
in places such as the UK, the US, Canada, Norway, and many other parts of the world.4
A coherent whole
Much of the discussion around regulations focuses on the EUDR, and understandably so. It
requires compliance on a tight timeline and will drive the most immediate changes. However,
all four European regulations covered in this chapter are important and designed to comple-
ment each other, addressing both environmental and human rights abuses. They operate as a
collective effort. In this context, the EUDR cannot be viewed in isolation from the wider corpo-
rate due diligence obligations on the environment and human rights as set out in the CSDDD.
5 These broader regulations will also help address some of the EUDR’s more contentious
aspects, such as its lack of support for farmer organisations in meeting compliance.
Deforestation-Free
Regulation (EUDR)
What it is
The European Union’s Deforestation-Free Regulation (EUDR) requires products entering the EU
market in seven key commodities including coffee to not originate from areas deforested after
December 31st, 2020,5 as well as for coffee imported into the EU to be produced in accordance
with the laws of countries of origin.6 Its implementation will start in December 2024.
Companies will need to prove that the products they source are traceable to the farm level
and are obtained and produced with full respect for the regulations of the countries of origin.7
Based on the risk of deforestation per country or region, various levels of risk assessment and
mitigation efforts will be needed. Products originating from high-risk sources will be subjected
to more frequent scrutiny.
Additionally, the regulation may prompt companies to increase private sector investment in
environmentally friendly production. The stricter requirements will support ‘sustainable coffee’
producers, potentially expanding access to export markets. The current setup of the EUDR
poses a significant risk: industry might offload the cost of compliance onto smallholder produc-
ers, instead of integrating the costs into their business models. To address this, the EU must
establish clear requirements and robust monitoring systems to ensure that market actors bear
their share of the compliance burden without irresponsibly shifting costs.
The EU and private sector companies need to provide substantial technical and financial sup-
port to small-scale farmer groups to implement geolocation and traceability requirements
effectively. This support should be coordinated at subnational, national, and corporate levels
(both in producing countries and consuming markets) through multistakeholder platforms.
It is important to put in place clear measures to avoid a shift in sourcing away from smallholder
farmers, and/or from countries perceived as high-risk, as the EU has not yet fully addressed this
issue. Nonetheless, beyond regulatory efforts, the private sector has a clear responsibility to
6 avoid disengagement and to support supply chain actors, ensuring that smallholders and less
equipped countries are not left behind.
Benefits to the coffee industry
Although many coffee companies and governments of producing countries are pushing back
against the EUDR, this regulation will have benefits for the coffee sector. It will increase the
ability of the sector to identify, prevent, mitigate, and remedy risk instances of deforestation
and forest degradation. It is also critical for the sector to play its part in meeting the Paris
Agreement of maximising climate change to 1.5 degrees centigrade. The traceability that the
EUDR requires will help companies comply with sustainability reporting requirements.
Common benefits of traceability include helping eliminate fraud, curbing waste, as well as
providing opportunities to find new efficiencies and for better quality control. Furthermore,
credible data collection is the future for all kinds of business. For coffee, it will be relevant
sooner than later to have data on climate and biodiversity impact. In that light, the EUDR is just
the first step.
Timeline
The regulation will be mandatory from December 2024 onwards, with small and medium enter-
prises (SMEs) having an extra year to become compliant. In practice, national authorities within
the EU will need time to put their systems in place. Furthermore, when national authorities will
start enforcing the regulations, experiences with other regulations show that the first interven-
tions will focus on helping companies understand the requirements and assisting them along
the road to compliance, rather than directly stepping toward punitive interventions.9 In practice
the EUDR will most likely be rolled out in stages.
There has been insufficient engagement and involvement of the producing countries in the
process. Moreover, the EU has been slow in developing the necessary compliance tools, espe-
cially the national benchmarking system to determine the level of risk of source countries, the
IT systems by which companies can submit their due diligence statements, as well as clarity on
how downstream operators can prove compliance.
Furthermore, at the time of writing, the Commission has been refusing to release the necessary
guidance for the EUDR, causing further frustration and pushback to the regulation.
Corporate Sustainability
Due Diligence Directive (CSDDD)
What it is
The Corporate Sustainability Due Diligence Directive (CSDDD or CS3D) requires companies to:
The CSDDD is not focused on a product or its import, but on the worldwide activities of the
corporation itself. The CSDDD will cover impacts in the company’s own operations, its subsi
diaries, and its supply chains. It is a realistic approach, acknowledging that there will be human
rights and environmental challenges in the value chains.
The CSDDD offers many benefits to smallholders, not only as economic operators, but also
as rightsholders. These benefits include the possibility of using complaint mechanisms that
companies must set up, access to justice in European courts for victims of corporate negative
impacts, and an improvement of social and environmental standards.
The CSDDD could drastically reduce slavery, forced labour, child labour, violence against work-
ers seeking to unionize, and other labour abuses that impact millions of smallholder farmers
and workers. New evidence has emerged in the apparel sector that a similar regulation to
the CSDDD, namely the German ‘Lieferkettengesetz’, is already forcing South Asian apparel
factories to comply with minimum wage laws, provide workers with written contracts, and give
bonuses as well as other benefits.
Furthermore, the CSDDD could contribute to greater adoption of sustainable coffee produc-
tion practices, leading to diversified farm productivity and a reduced environmental footprint
(including healthier water for coffee growing communities dependent on wells and rivers for
water).
A strong knock-on effect of the CSDDD is that – as long as a company with strong presence in
Europe is involved – farmers and workers will benefit independently whether they produce for
the EU or for another market.
Timeline
The CSDDD is a directive, rather than a regulation, meaning that the directive will require EU
member states to develop national regulations within two years of its passing in July 2024.13
This means some of the key issues around enforcement and compliance are still being deve
loped as national legislations are set up. However, national enforcement agencies are expec
ted to be designated to ensure compliance with the national regulations by 2027 at the latest.
Corporate Sustainability
Reporting Directive
What it is
The Corporate Sustainability Reporting Directive (CSRD) requires companies to report on how
their activities impact human rights and environmental sustainability, as well as how sustain
ability impacts the financial health of the company.14 It will provide more accurate and com
parable data to stakeholders and make it harder for companies to pick and choose which
environmental and human rights metrics they report on.
For companies such as supermarkets, harmonized reporting from the coffee companies whose
products they retail, will make overarching reporting simpler. The clarity of reporting will also
facilitate the attraction of investments, as well as help to better communicate to consumers.
Finally, it will help compare the progress of companies with their competitors, both within the
coffee sector and in other commodity sectors.
9
Green Claims Directive
What it is
The European Commission’s proposed Green Claims Directive will set minimum standards for
how companies can and cannot make environmental claims, either in advertisements or on
packaging.15 Claims will have to be based on solid data and cannot consist of cherry-picked
outcomes, and they must include reporting on the full life cycle of the product as well as on
environmental impacts such as CO2 emissions.
The Green Claims Directive will also make it easier to reassure consumers that company claims
are real, rather than greenwashing, making these green claims reliable, comparable, and veri
fiable throughout the EU.
National Regulations
Beyond the EU many other consuming countries either have implemented, are developing,
or have announced to develop a wide range of sustainability regulations that are or might
become relevant to the coffee sector.16 Some of the key ones include:
• In December 2023, the UK government announced measures under the Environment Act to
combat illegal deforestation in supply chains (Schedule 17). Coffee is not yet included in the
implementing regulation, but could be in the future.
• Recently, a bipartisan reintroduction of a renewed FOREST Act has raised the possibility of a
US based environmental regulation as well, although the current version of the bill does not
include the coffee sector.
• Though not a regulation, the US State Department published its “National Action Plan on
Responsible Business Conduct” in March 2024, committing the US government to strength-
en policy coordination with other governments and to develop guidance for investors on
conducting human rights due diligence.
10 • There are several state-level bills in the United States at the State level for Deforestation-
Free Procurement, most notably in New York, California and Illinois.
• In the US, the Securities and Exchange Commission (SEC) adopted climate-related disclo-
sure rules in March 2024, albeit in a more limited form than initially proposed.
• Similarly, Australia, Japan, and Singapore are considering mandatory climate-related
disclosures for large businesses and financial institutions.
11
PART TWO
In broad terms, the coffee sector has responded to the changing regulatory environment in
three different ways; by pushing back against the regulations, by being absent from the discus-
sion, and/or by making unfounded claims about compliance. As a result, many coffee compa-
nies, producers, and coffee-producing governments are presently ill-equipped to handle this
transformation.
To some extent, this lack of preparedness stems from the sector delaying its proactive engage-
ment; much time was spent by both companies and governments of producing countries in
efforts to either water down or delay the regulation, for example by questioning the sector’s
contribution to deforestation.
The time spent on these pushbacks could have better been turned towards preparing for com-
pliance, as some of the changes are indeed fundamental, and require a significant effort. By
partnering, sourcing, and investing in small-scale farmers and collaborations with governments
of producing countries, businesses could have adopted a ‘no regrets’ approach, positioning
themselves ahead of evolving guidelines.18
In recent months, there have been multiple initiatives to catch up. Organisations such as the
European Coffee Federation (ECF), the Global Coffee Platform (GCP) and International Coffee
Organisation (ICO) have stepped up efforts to support the coffee sector in understanding and
preparing for the incoming legislative changes. These interventions include awareness-raising
campaigns, conferences, discussion webinars, websites designed to assist with the rollout and
letters of clarification to the European Commission. This wave of activity signals a growing
recognition of the need for proactive adaptation. As a consequence, coffee has been “missing
in action” in many of the policy dialogues, both at the EU and at a globel stage.
Nevertheless, misconceptions persist in the sector, along with bold and misleading claims that
lack data support regarding the new regulations and the necessary industry changes. This sec-
tion examines some of the arguments behind these perspectives.
12
Missing in action
The move toward regulation in sustainability has been a gradual process, spanning more than
a decade, with multiple key milestones since the adoption of the UN Guiding Principles on
Business and Human Rights in 2011 and the Paris Climate Agreement in 2015. Furthermore,
both national legislations and the suite of EU sustainability regulations have been in develop-
ment for years. The EU announced the development of the EUDR in 2019.
Throughout this period, the coffee sector has largely remained absent from key policy dia-
logues, whereas other sectors have actively advocated for regulatory measures, including com-
panies as diverse as textile company H&M, home decoration giant Ikea, automotive company
Volkswagen, and the entire cocoa sector.19 For instance, the ECF joined these discussions at
a late stage, seemingly in response to growing pressure. Sector analysis, opinion pieces, and
alternative scenarios about deforestation-free coffee and due diligence only began to emerge
in 2022-23.20 As a result of this absence, rather than sitting at the table, the coffee sector has
found itself on the menu.
Playing catch-up
Furthermore, there is limited understanding within the coffee sector about the implications of
operating sustainably in a regulated environment. The coffee industry has been unable to pre-
vent human rights abuses or to implement comprehensive sustainability measures and trans-
parency in supply chain at a large scale. This despite many promises to do so in recent years. If
the industry had lived up to their own earlier commitments, EUDR compliance would be much
easier now.
Fundamental questions remain unresolved; what are the mechanisms to keep power account-
able, who will cover associated costs, and how to establish credible methods for making
claims? For many of these questions, the coffee sector now faces the challenge of having to
catch-up.
Cross-sectoral learning
However, the wheel does not need to be reinvented entirely as other sectors are further down
this road. Many coffee companies operate in multiple regulated commodities such as cocoa,
timber, soy, palm oil, and cattle products.
There are many different tools available. The coffee sector can benefit from the guidance that
the Accountability Framework has provided.21 The cocoa sector also appears to be better
prepared and less antagonistic to the regulatory changes.22 In palm oil, RSPO and other actors
have provided guidance on compliance with the EUDR.23 For the pulp and paper sector, it is
the FSC.24
The coffee sector should be able to adopt and implement the best practices and guidance
from other commodities, integrating them effectively into its supply chain operations. These
best practices should include learning from past mistakes (also in other sectors).
13
Pushing Back
Despite initially having sufficient time to prepare for regulatory compliance, the coffee industry
has dedicated much of its energy resisting the new regulations. The focus of this pushback has
often been on concerns about the short implementation timeline of the EUDR and the asso
ciated costs, indicating a reluctance to adapt to new regulatory realities. While the concerns
and requests for clarification are valid, what remains absent from letters of coffee industry as-
sociations to the European Commission is any acknowledgment of the industry’s own responsi
bility in addressing the challenges ahead. 25/26
If the coffee industry is not ready at present, it should be mobilising all the resources it can to
ensure that it is. Rather than resisting regulatory measures, industry stakeholders should prio
ritize proactive engagement in preparations. This means investing in capacity-building and
making the necessary operational adjustments to support coffee-producing countries and
maintain access to the EU market.
Misinformation
and Dubious Claims
Numerous claims have been made about the changing regulatory environment by stake
holders within the coffee sector that require corrections, nuance, or qualifications.
DUBIOUS CLAIM 1
The need to invest now for future rewards deters many corporations, which are often reluctant
to sacrifice short-term profits. However, integrating forest conservation with coffee agroforestry
offers a path to align economic and environmental objectives. Given that coffee is a perennial
plant with a productive lifespan of up to 25 years, this approach requires long-term planning
and investment. Without it, many small-scale farmers, who lack the resources and flexibility to
adapt or relocate may be forced to abandon coffee cultivation.
Implementing sustainability measures requires time, effort, and financial investment, costs
that often translate into higher consumer prices. Furthermore, while curbing deforestation
may entail costs in the short run, accepting cross-commodity deforestation in the long run will
contribute to catastrophic climate change that would shrink land suitable for coffee by a huge
amount.27 Losing half of the land where coffee can be grown is clearly bad for business, much
worse than having to comply with the EUDR and other related regulations.
Nevertheless, if products are barred from entering markets due to environmental or human
rights violations, the primary concern should be addressing these violations (which would
guarantee market access), rather than criticising the law that requires companies to do so. It is
precisely because the current voluntary systems have not been able to create sufficient impact
that a regulatory approach is needed and imminent.
14
Liability for environmental and human rights violations should be viewed as a standard aspect
of business accountability, similar to liabilities for financial fraud or other legal infractions.
Leaving fraud rampant is bad for business. In the same way, allowing unsustainable practices
to run rampant is as well. Measures taken to curb deforestation, such as being fully traceable,
can help a company operate more smoothly and efficiently with opportunities to reduce waste,
fraud, abuse, and corruption.
A regulatory framework ensures a level playing field for all companies, facilitating compliance
with standardized requirements and closing loopholes that could be exploited by unethical
practices. The predictability and consistency provided by EU-wide regulations will enhance
legal certainty for companies, which is clearly advantageous for coffee companies. Adopting a
unified EU jurisdictional framework – as opposed to disparate national systems – significantly
reduces legal risks for companies. It also makes sustainability easier to operate at scale and
ensures consistent practices across various stakeholders within the supply chain.
Regulatory measures aimed at safeguarding environmental and human rights elevate the
viability of the coffee industry. Regulatory frameworks provide essential clarity and establish
an enabling environment for the coffee sector to address its most pressing sustainability
challenges.
DUBIOUS CLAIM 2
Some VSSs and company programs can guide companies toward sustainability and help them
align with emerging social and environmental regulations. VSS and other sustainability pro-
grammes have a crucial role to play. They can help build the necessary infrastructure, assist
farmers in organising, and lay the groundwork for strengthening traceability. These initiatives
can also provide the means to cover the costs of compliance, support farmer empowerment,
and promote the implementation of regenerative agroforestry practices.28
Current VSS frameworks and company programmes do not achieve traceability down to farm
and plot levels, or ensure compliance with legality and due diligence. Furthermore, VSS’s so
far have not demonstrated being able to increase farmer income and worker wages, or even
eliminate slavery or child labour. Some VSS’s and company programmes can put companies on
a path toward sustainability in a way that strengthens companies’ journeys towards compliance
with sustainability regulations. Most standards are taking steps to recalibrate their criteria.
However, this can only be one of the steps, and much more is needed, as a VSS and company
programmes alone cannot ensure sustainability, nor can it ensure compliance to the upcoming
regulatory frameworks. Industry is aware that it should be doing more, but the pressure is sim-
ply not there; VSS are relatively inexpensive, and compliance alone is often sufficient to deflect
the harshest criticism. VSSs often speak out against this, but the dominant narrative from in-
dustry remains strong.
However, the rules of the game are changing with the new regulations. For the CSDDD, a
VSS will never be sufficient, as the CSDDD requires corporations to have process-based com
pliance, not a product-based compliance. It is not the role of a VSS to meet the new regulatory
demands- even though some companies may be expecting this. VSS are voluntary tools to be
15
used on top of compliance with legislation.
A farm-based standard will simply not be sufficient for a law requiring multinationals to have
internal systems in place. For product-based regulatory compliance, companies must at the
very least embrace a ‘VSS plus’ approach, while at the same time collaborating with VSS’s to
strengthen the standards and auditing procedures.
DUBIOUS CLAIM 3
The current territorial approaches focus solely on the deforestation aspect of the EUDR,
neglecting the legality requirements and other laws such as the CSDDD and related
regulations. As a result, these approaches are not future-proof for compliance and remain
incomplete.
If territorial approaches are to be adopted, it is essential to underscore that these can only
serve as temporary measures during the initial implementation phase, unless they can ensure
legality and include smallholders. Furthermore, they must also be directly linked to plot-level
traceability. While it is understandable that service providers are looking to profit from these
regulatory changes, territorial approaches can only be credible if they are established by a
transparently and inclusively governed multi-stakeholder institution, rather than driven by com-
mercial interests.
DUBIOUS CLAIM 4
While it is true that smallholders will face significant challenges in adapting to these new
requirements and will need support (see Part Three for further details), many farmer organi
zations view the EUDR as an opportunity to improve farmers’ livelihoods. Although traceability
may be challenging, it is also seen as a crucial element in reducing supply chain complexity
and ensuring that purchase prices are respected.
Additionally, the new regulations could encourage the development of better digital solutions
for cooperatives, improving daily management and payment methods, thereby strengthening
the position of smallholders in the supply chain and streamlined internal procedures.
The primary reason smallholders might be severely impacted by these compliance demands
is if coffee companies decide to discontinue their trade relations with them. This risk is
particularly acute for smallholders located near forests, where compliance requirements may
be more stringent than for those not in such areas. However, this risk would be the result
of company’s decisions, not of the regulations themselves. As such, it is entirely up to the
companies whether they will expose the smallholders – whom they claim to care so much
16 about – to this risk. Company purchasing practices – unlike many of the enabling environment
requirements – fall squarely within the sphere of control of companies.
PART THREE
Recommendations
and challenges
It is clear that we are entering a new era where sustainability is no longer a nice-to-have – it is
now a mandatory part of every coffee company’s operation. The suite of European and other
regulations signifies a commendable and crucial advance in addressing the urgent global
issues related to environmental sustainability and human rights. For far too long, these issues
have been the subject of voluntary efforts, that have consistently fallen short. Establishing a
mandatory level playing field is an urgent necessity, and regulators are finally recognizing this
need.
In the short term, adjusting to this new reality will present challenges.30 And, as with any
complex new instrument, ongoing calibration will be required; regulations will likely require
regular revisions in the coming years to ensure their effectiveness and desired impact. The
EUDR, for example, has a built-in review period of several years. Furthermore, the significant
changes that are introduced to global trade must be carefully managed to avoid harming vul-
nerable groups and preventing the powerful from exploiting the situation to further strength-
en their position.
As the EUDR is the first regulation to take effect, the challenges discussed in this chapter may
seem focused on the EUDR; however, they are also highly applicable to the CSDDD, and
somewhat applicable to the French ‘Devoir de Vigilance’ law, the German ‘Lieferkettenge-
setz’ and other similar regulations. Both the Commission and the EU Member State govern-
ments, as they draft their national regulations to comply with the CSDDD, should consider
these challenges from the outset.
If implemented wisely, these new regulations (particularly the CSDDD) present a great
opportunity for the sector to tackle the huge issue of farmer poverty. This would be beneficial
17 for everyone – producers and industry alike – and would help solve many of the related
problems facing the coffee sector, such as child labour, deforestation, and gender inequality.
However, regulations that attempt to enforce sustainability compliance without addressing the
root causes of poverty can create problems for poor and vulnerable small-scale farmers. For
example, cracking down on child labour or deforestation without ensuring farmers and workers
have a living income, is unlikely to succeed and may become dangerously punitive for some
desperate farmers who lose access to markets.
Therefore, any regulatory environment that demands compliance must provide financial and
technical support to enable smallholders to comply.31 Companies could, for example, cover the
costs of geomapping the IT systems used to demonstrate compliance, and other compliance
costs of farmers and cooperatives in origin countries.
An important part of this support should also be provided by the regulators in the form of finan-
cial assistance. Regulations must clearly stipulate that small-scale farmers cannot bear the cost of
compliance without adequate compensation. However, regardless of the actions of regulators,
companies have the responsibility to provide a key part of this support.
In this regard, the EU has committed supporting funds to help farmers comply to the regula-
tion.32 However, the EUDR itself has significant gaps, and needs the Living Income provisions of
the CSDDD to ensure farmers are compensated for the costs of regulatory compliance.33 Until
the CSDDD comes into force, companies should transparently communicate how they are ensur-
ing that costs of compliance are not passed down to farmers.
The EU should also proactively support small-scale farmers as well as governments of producing
countries, by providing substantial financial and technical support packages to coffee farmers
in all major coffee growing regions, with special regard for the farmers that need it the most.34 It
should also be very clear in the guidance for the implementation of the EUDR to avoid pushing
compliance costs onto farmers or disengaging from high-risk areas.
Digitalisation dependencies
Compliance with the EUDR requires digital data management across various stakeholders and
countries, primarily due to the regulation’s demands for traceability to specific plots of land, as
well as additional information to verify legality and deforestation-free production. Presently, a
range of approaches and tools are under development, each differing in terms of business mod-
el, ownership, and organization.
While data management systems can benefit coffee cooperatives, compliance with the EUDR
mandates their ability to share data with buyers. Given that many smallholders still lack the tech-
nical capacity to handle the geolocation data required by the EUDR, they rely on the systems
provided by the buyers. Consequently, shifting from one buyer to another may pose difficulties.
One of the primary hurdles in the current digital landscape is interoperability between systems.
This situation risks locking smallholders into relationships with specific buyers, limiting their free-
dom to operate in the market and deepening existing power imbalances.
There is also a serious concern of inadequate data protection, which could lead to violations of
smallholders’ personal rights. Moreover, the question of data ownership and how farmers might
benefit from it must be addressed. Without this, the power imbalances in the sector could widen
further, leaving smallholders vulnerable to exploitation.
Support will be needed for farmers to address these risks, both financial support and capacity
building. Furthermore, multilateral and multistakeholder processes should be started to support
producers in producing countries in challenges around data collection.35 These processes should
be coupled with clear commitments of companies and strong transparency and accountability
mechanisms.
18
Besides being a responsibility of each company, interoperability, as well as more open traceable
systems, also provide significant benefits to the private sector, both in affordability and credibility.
In the medium to long term, processes of digitisation could be supported by the setting up of
a credible national traceability system. In that light, there is a real role for producing govern-
ments to play in this.36 Ideally, these national traceability systems would feed into an interactive
geolocation system at EU level, which could monitor real-time deforestation and provide alerts
for competent authorities.
Although the EU has committed to financial and technical support for compliance to the EUDR
(i.e., through embassy funding in producing nations, direct support from Brussels, and the
Team Europe Initiative), this support is insufficient to be able to support all small-scale farmers
in all sectors. Furthermore, key EUDR implementation tools, such as the Information System
for due diligence statements was very late in being rolled out, and clarity on the obligations of
downstream operators, remains unclear until today.
One way of ensuring this reliability and necessary dialogue is by setting up national
multi-stakeholder networks in the same vein as the Voluntary Partnership Agreements were
set up for the Timber Regulation. These allow smallholders, civil society, industry, and govern-
ments to convene with the EU to discuss support packages as well as ongoing issues related to
compliance. This could also include innovative ideas such as developing national traceability
systems. Such steps would enable regulations to become more owned within producer count
ries, provide more insight into legality within the country (including which laws are important to
monitor for the legality clauses, especially for the EUDR), and could even encourage producer
countries to enact mirror legislation, which could help them in the long run and reduce their
risk rating worldwide.
Recent pushback in Brussels has led to reviews and sometimes complete shelving of key en-
vironmental requirements within the Green Deal by the European Commission. If similar steps
are taken regarding the EUDR and CSDDD, investments that have been made by companies
and farmers would be in vain and would also diminish the credibility of the EU regulatory sys-
tem.37
19
PART FOUR
In the current landscape, the policies and investments of many coffee companies fail to
address the pressing needs facing the coffee sector. As a result, many coffee farmers
find themselves ill-prepared to meet new regulatory standards, placing them at risk of
marginalization from the EU and other key coffee markets.
The key lies in a scenario where private sector commitments, international policies, multi-
stakeholder collaboration, and financial assistance converge to embrace smallholder coffee
producers.
Regulations will never be the full answer, but without regulations for a mandatory level playing
field, sustainability will remain on the fringes of global commodity markets.
Solutions are never one-size-fits-all and addressing deeply ingrained structural issues demands
tailored solutions.
Regulations are here to stay. It is up to the coffee sector to work hard to catch up on its late
start and to make good on its environmental and human rights promises and potential.
Governments of producing countries need to move their stance from pushing back against the
regulations to creating an enabling environment for all actors that facilitates compliance.
Traders and roasters, the powerhouses of the coffee industry, must actively demonstrate
their commitment by ensuring that the benefits of the coffee trade extend beyond financial
gains. They need to take the lead in promoting environmental stewardship and review their
purchasing practices to improve the income of the farmers who sustain the sector. For these
industry leaders, sustainability must evolve from a buzzword into a core business imperative.
Furthermore, collective efforts to scale-up coffee sector wide interventions will better position
the sector for the transition from voluntary to mandatory coffee sustainability.
20 In the coming years, sustainability in the coffee sector will transform from a ‘nice to have’
attribute to a license to operate. The sector needs to act with all the urgency that this sea
change requires.
ENDNOTES
1 Climate models and field evidence reveal that 12 Including this study on the benefits in the palm
climate change will gradually push coffee pro- oil sector, and this one on the benefits for the
duction into new areas, threatening some of the timber sector.
planet’s last remaining primary forests along with
13 In the EU, a Regulation is a single law that
their rich ecosystems and biodiversity.
applies uniformly across all member states, while
2 This set of EU regulations builds upon and aligns a Directive requires member states to create
with the international soft laws mentioned earlier, their own national laws that meet the Directive’s
including the UN Guiding Principles on Business requirements. The EUDR is a Regulation because
and Human Rights and the OECD Guidelines deforestation falls under the EU’s direct regu-
for Multinational Enterprises on Responsible latory powers. In contrast, regulating business
Business Conduct. behaviour in social and environmental areas falls
under national sovereignty, which is why the
3 Forced labour has not received much atten-
CSDDD is a Directive. This means it will lead to
tion in the coffee sector so far, the possibility
27 different national laws, all of which need to be
of its presence in coffee regions suggests that
aligned.
the EU’s Forced Labour Directive could soon
become a significant regulation for the industry. 14 While the CSRD and the CSDDD are not directly
For instance, forced labour has been repeatedly linked, the CSDDD has been drafted to align
documented in Brazil, see: SOMO and Conectas closely with the CSRD. Additionally, the transpar-
(2024). Bitter brew. Modern slavery in the coffee ency required by the CSRD will clearly impact the
industry. risks identified in the CSDDD.
4 Several institutions and individuals have started 15 The text of the Green Claims Directive is still
offering overviews of the various legislative under negotiation and is expected to enter
developments, including the Legislative Data- trilogue negotiations once the new European
base of the ICO. Parliament is installed. Therefore, the final details
of this Directive remain uncertain.
5 Other commodities covered by the EUDR
include cattle, cocoa, palm oil, soy, timber, and 16 Even within the EU, there are national regulations
rubber, as well as derived products such as on this topic, such as Germany’s Lieferketten-
leather, furniture and chocolate. sorgfaltspflichtengesetz (LkSG) and France’s Loi
relative au devoir de vigilance.
6 If national governments legalise deforestation
after the 2020 cut-off date, the EUDR’s date will 17 The ICO Taskforce Global Knowledge Hub main-
still apply. Conversely, if stricter national rules tains a database that includes many regulations
exist, such as an earlier cut-off date, those more already in force. However, many of the regula-
stringent requirements will take precedence. tions discussed in this paper are not yet featured
However, there is real risk that national regula- in that overview.
tors might weaken national legal standards to
18 Forest Trends (September 14, 2022). Ten things
make compliance easier. This has happened in
companies and investors can do to meet no-de-
Peru, where amendments to the Forestry and
forestation commitments.
Wildlife Law were weakened to align with EUDR
requirements, see: Peña Alegría, P. (2024). (Mis) 19 Examples can be found in an op-ed by the
Adapting Domestic Law to Meet New Interna- founder of CoffeeWatch, a participant in VOCAL,
tional Environmental and Trade Rules: How Peru see: E. Higonnet (April 25, 2024). EU law to
Changed Its Environmental and Land Use Rights reduce deforestation is on a knife’s edge, will
Laws in Response to the European Union Defor- leaders act?
estation Regulation.
20 See for example the ECF reactive statement to
7 Including the rights of indigenous people and the EC proposal of regulation on deforestation-
laws prohibiting child labour and slavery. free commodities and the ECF position paper
on the EC proposal for a directive on corporate
8 While the EUDR will target deforestation from
sustainability due diligence.
2020 onwards, it will not tackle the damage
caused before that cut-off. This does not suggest 21 Such as Accountability Framework’s Operational
deforestation did not happen before, nor does it Guidance document.
offer solution for the environmental harm already
done, see: Weisse, M., Goldman, E., and Carter, 22 Since 2019, a group of cocoa companies
S. (April 4, 2024). Forest Pulse: The latest on the and civil society organisations have been
world’s forests. working together to think about and shape the
regulatory landscape for cocoa, through the
9 The EUDR regulation supersedes the rules to Cocoa Coalition. This Coalition includes several
fight global illegal logging and associated trade, companies that also trade in coffee, such as
the EU Timber Regulation (EUTR) came into force Nestlé. Furthermore, the cocoa sector’s umbrella
back in 2013. organisation, ECA, is working with its members
to develop guidance on how best to comply with
10 This is largely –though not entirely– in line with
the regulatory changes.
the recently updated OECD Due Diligence
Guidance for Responsible Business Conduct. 23 Roundtable on Sustainable Palm Oil (RSPO)
21 (April 26, 2023). Gap analysis between RSPO
11 A second joint position paper by the VOCAL Alli-
principles and criteria and EUDR.
ance on ‘living income and purchasing practices
in coffee’ is also planned, likely to be released in
the first half of 2025.
24 Listen to episode 67 and 68 of the Forest for the 33 The EUDR mentions in Recital 50 that “reason-
future podcast of FSC, see: How FSC is aligning able efforts should be undertaken to ensure that
with the EUDR. a fair price is paid to producers, in particular
smallholders, so as to enable a living income and
25 Brown, N. (August 20, 2024). Opinion: Large
effectively address poverty as a root cause of
roasters urge EUDR delay, but where’s the culpa-
deforestation.” While this is not a strict require-
bility? Daily Coffee News.
ment to pay fair prices, it is a clear recommen-
26 Several sector and countries have called for a dation that has not received enough attention
postponement of the EUDR, with the coffee in the EUDR discussions. Coffee companies can
industry raising specific concerns in multiple use this guidance to proactively avoid negative
letters to the European Commission: consequences of EUDR, such as market exclusion
of smallholders.
Deutscher Kaffeeverband (DKV) (February 18,
2024). Subject: Application of the EUDR planned 34 Especially smallholder farmers, farmers in
for the end of the year is not possible; Delay of marginalised communities, women headed
application and debureaucratisation urgently households, etc.
required.
35 A good example of such a process is the recent
European Coffee Federation (ECF) (February 20, platform for data interoperability that was initi-
2024). Subject: The reality of EUDR implementa- ated by INA and GIZ, see: Digital integration of
tion in the coffee supply chain: a call to reconsi- agricultural supply chains alliance (DIASCA).
der the implementation and timeline.
36 Key recommendations for national traceability
EU Coalition of industry associations (signed by systems are detailed in this paper, see: FERN
ECF) (May 17, 2024). Subject: EUDR information (2024). Transformative traceability. How robust
system not yet on track to meet requirements of traceability systems can help implement the
properly functioning supply chains. EUDR and fight the drivers of deforestation.
International Coffee Partners (ICP) (June 5, 2024). 37 The incredibly ugly horse-trading over the
Smallholder coffee farmers need adequate CSDDD – even after it had cleared the trilogue
structures, enough time, and financial resources stage – is a stark example of the shaky credibility
to comply with EUDR. of the EU Parliament, see: European Coalition for
Corporate Justice.
ECF, GCP, WCPF and others (August 14, 2024).
Subject: Call for urgent action for effective EUDR
implementation.
27 Grüter, R., Trachsel, T., Laube, P. and Jaisli, I.
(2022). Expected global suitability of coffee,
cashew and avocado due to climate change.
PLoS ONE 17.
28 For more information on the key constraints and
strengths of VSS in delivering on sustainabil-
ity and compliance commitments, see: Voice
Network (2019). Certification is not the systemic
solution to unsustainable cocoa.
29 More details on how the system works can be
found in this explainer by Algrano. While the
plan may not be perfect, it is still a plan -unlike
many industry actors who have no plans at all.
Similarly, the Ugandan Coffee Development
Authority, in collaboration with the Uganda
Coffee Platform, is implementing a territorial
approach as a short-term compliance strategy,
see: Agrospecials (2024). Uganda wrestles with
EUDR compliance amidst coffee trade chal-
lenges.
30 It is of paramount importance to stress that this
is not criticism of the regulations themselves. In
recent years, opponents have frequently seized
on any criticism of the regulations, often dis-
torting it. Any publications that cite this chapter
without acknowledging VOCAL’s explicit support
for regulation should be regarded as a disingen-
uous misuse. This paper represents a sincere
effort to enhance a much needed and largely
positive process.
31 Oger, A. (2023). Environmental and social
impacts embedded in EU trade policies. The
case of EU trade-related autonomous measures
in Vietnam. IEEP.
32 European Commission (December 12, 2023).
22
COP28: EU steps up cooperation with partner
countries on deforestation-free supply chains and
outlines further support measures.
Colophon
This paper is the first publication of the Voice of Organisations in Coffee Alliance (VOCAL).
It is the result of several rounds of consultation with VOCAL participants and other
stakeholders in the coffee sector in the period May – September 2024.
Copyright: We encourage the use of its content in other publications, provided that proper
references are given. Published under Creative Commons License Attribution-ShareAlike 4.0
International.
The membership and structure of VOCAL are currently still in a formative phase. The
organisations contributing to this first publication are Coffee Watch, Fairfood, Fern, Forests
of the World, Inkota Netzwerk, Oxfam Belgium, Public Eye, and Rikolto, supported by Ethos
Agriculture and the VOICE Network.
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