Barry Callebaut (BARN) Status Update summary

EUDR regulation overview and strategic response

• EUDR aims to prevent imports of commodities linked to deforestation or illegal farming, requiring traceability, deforestation-free status, and legal compliance for cocoa and other commodities from January 2025.

• Compliance requires due diligence statements, risk assessments, and risk mitigation declarations for all supply chain plots.

• The approach is structured around risk: knowledge of deforestation dynamics, robust due diligence, and forest-positive risk mitigation.

• Sourcing focuses on high-risk countries, with ongoing global and sub-national risk assessments guiding sourcing strategies.

• Forest protection is central, with investments and partnerships in high-risk areas to mitigate deforestation risks.

Due diligence and traceability tools

• Seven formalized tools support compliance: country, supplier, and farm-level risk assessments; deforestation monitoring; yield control; grievance mechanisms; and stakeholder engagement.

• Deforestation monitoring uses satellite imagery and remote sensing, with high-resolution analysis down to 0.1 hectare.

• Traceability audits verify mapped plots, farmer data, and transaction records, with field checks and financial reviews.

• All mapped farms are assessed for compliance, and non-compliant sources are excluded from the supply chain.

• Starling technology is used for advanced land use and deforestation monitoring.

Market impact, compliance, and competitive positioning

• Significant portions of the global cocoa supply are not yet traceable, with traceability being the main compliance gap.

• Non-compliant volumes are unlikely to shift easily to other markets due to similar traceability demands in North America and limited APAC demand.

• No country-wide bans are expected, but high-risk flows may face fines and trade consequences.

• The company is concentrating EU supply from five main countries and has gone beyond regulatory requirements by mapping all plots with polygons.

• Early recognition of EUDR's impact and robust vertical integration provide a competitive advantage.