International Sustainability and Carbon Certification (ISCC) Standard and Its Alignment with the New EUDR Scheme

Landscape of global sustainability is increasingly shaped by stringent regulations and certification standards aimed at reducing environmental impact and promoting responsible practices. Among these, the International Sustainability and Carbon Certification (ISCC) standard has emerged as a leading framework for ensuring sustainable and traceable supply chains. With the introduction of the European Union Deforestation Regulation (EUDR), there is growing interest in how existing standards like ISCC align with new regulatory requirements.

Overview of the ISCC Standard

The ISCC standard is a globally recognized certification system that covers the entire supply chain, from raw material production to the final product. It was developed to ensure that biomass, bioenergy, and other sustainable products meet high environmental, social, and economic criteria. The ISCC system is applicable across various sectors, including agriculture, forestry, and energy, providing certification for sustainable and deforestation-free production practices.

Key components of the ISCC standard include:

1. Sustainability Requirements: These cover biodiversity protection, soil conservation, sustainable water management, and responsible land use.

2. Greenhouse Gas (GHG) Emissions Reduction: The ISCC standard emphasizes the reduction of GHG emissions throughout the supply chain, ensuring that certified products contribute to climate protection.

3. Traceability: A robust traceability system is integral to ISCC certification, ensuring that every stage of the supply chain can be tracked and verified.

4. Social Responsibility: The ISCC standard includes criteria for respecting human rights, labor rights, and ensuring fair working conditions.

Introduction to the European Union Deforestation Regulation (EUDR)

The EUDR, a recent legislative development, represents the EU's commitment to combating global deforestation and promoting sustainable land use. This regulation, which came into force on June 29, 2023, requires operators and traders to prove that their products do not originate from recently deforested land.The regulation aims to prevent the import of products linked to deforestation and forest degradation into the EU market. It covers commodities like cattle, wood, cocoa, soy, palm oil, coffee, rubber, and their derived products like leather, chocolate, and furniture. The EUDR requires companies to demonstrate that their supply chains are deforestation-free, and that their products are legally sourced and produced in compliance with relevant national laws.

Alignment of ISCC with the EUDR Scheme

Given the stringent requirements of the EUDR, there is a natural alignment between the ISCC standard and the new regulation. Both frameworks share common goals of promoting sustainability, reducing environmental impact, and ensuring transparency in supply chains. However, the degree of alignment depends on several factors:

1. Deforestation-Free Criteria: The ISCC standard already includes strict requirements to prevent deforestation and protect biodiversity, making it well-aligned with the core objectives of the EUDR. ISCC-certified products must come from land that has not been converted from forests or other natural ecosystems since a specific cut-off date, similar to the requirements under the EUDR.

2. Traceability and Transparency: The ISCC’s emphasis on traceability aligns closely with the EUDR’s due diligence requirements. Both require companies to demonstrate full supply chain transparency and the ability to trace products back to their origin. The ISCC's well-established traceability system can thus serve as a reliable framework for companies aiming to comply with the EUDR.

3. Legal Compliance and Social Responsibility: While the EUDR focuses on legal compliance concerning land use and deforestation, the ISCC standard goes further by incorporating broader social and environmental criteria. This holistic approach ensures that ISCC-certified products not only meet deforestation-free requirements but also adhere to higher standards of social responsibility and environmental stewardship.

4. Greenhouse Gas Emissions: While the EUDR primarily addresses deforestation, the ISCC’s focus on GHG emissions reduction adds an additional layer of sustainability, making ISCC-certified products more attractive to environmentally conscious consumers and regulators alike.

Challenges and Opportunities

Despite the clear alignment, there are challenges and opportunities for companies seeking dual compliance with both ISCC and EUDR. One challenge is the potential for varying interpretations of what constitutes deforestation-free, depending on the region and context. Companies may need to invest in additional due diligence processes to ensure that their ISCC certification fully meets the EUDR’s specific legal and regulatory requirements.

On the opportunity side, ISCC certification can serve as a strong foundation for demonstrating compliance with the EUDR. Companies already certified under ISCC may find it easier to adapt to the new EUDR requirements, given the shared focus on sustainability and traceability. Furthermore, the alignment of these two frameworks can enhance the credibility and marketability of certified products, as consumers and businesses increasingly prioritize deforestation-free and sustainable goods.

Strategic Alignment for a Sustainable Future

The ISCC standard and the EUDR represent two powerful tools in the global effort to combat deforestation and promote sustainable practices. For companies operating within or exporting to the EU, understanding and aligning with both frameworks is not only a regulatory necessity but also a strategic opportunity. By obtaining ISCC certification and ensuring compliance with the EUDR, companies can demonstrate their commitment to sustainability, enhance their market positioning, and contribute to a more sustainable future.

While the ISCC standard and the EUDR are distinct, they are highly complementary. Companies that align their operations with both frameworks will be well-positioned to meet the demands of a rapidly evolving regulatory environment and to lead the way in promoting responsible, sustainable practices across global supply chains.