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Deforestation is responsible for approximately 10% of global greenhouse gas emissions. Reducing deforestation and conversion is therefore a key element in combating climate change. Moreover, agriculture accounts for around 80% of global deforestation. The commodities covered by DCF commitments, such as palm oil, soya and cocoa, are significant drivers of this trend.
As global supply chains face growing pressure to eliminate their environmental footprint, companies are increasingly adopting Deforestation- and Conversion-Free (DCF) commitments. As of 2023, over 50 major companies (including Nestlé, Unilever, and Mars) have made deforestation- and conversion-free commitments across key supply chains such as palm oil, soy and cocoa. These pledges aim to ensure that commodities are produced without harming forests or other natural ecosystems. For sustainability teams, DCF commitments are rapidly becoming a core component of risk management, ESG performance, and regulatory compliance.
This guide outlines the scope and implications of DCF commitments, as well as how companies can effectively implement them, with a focus on actionable insights and due diligence.
What does deforestation- and conversion-free (DCF) mean?
According to the Accountability Network:
Deforestation: Clearing of natural forest to make way for other land uses
Conversion: Broader term; includes clearing any natural ecosystem (e.g.,
savannahs)
DCF Commitment: Policy to eliminate deforestation and conversion from supply
chains
Many companies stop at "deforestation-free," but that leaves other critical habitats vulnerable. A true DCF commitment includes both. A DCF commitment ensures that a company sources only from areas where no deforestation or conversion of natural ecosystems has occurred since a specified cut-off date. Unlike more limited no-deforestation policies, DCF commitments reflect a more comprehensive and scientifically aligned approach to land-use change and biodiversity protection.
Why are DCF commitments important?
Regulatory compliance
While DCF is voluntary, it can contribute to regulatory compliance, such as compliance with the General Data Protection Regulation (GDPR), Anti-Money Laundering (AML) Regulations, and the EU Deforestation Regulation (EUDR), which require certain proof that can be provided by DCF.
Risk management
Eliminating deforestation-related risks ensures long-term supply chain resilience and brand integrity.
Investor expectations
Investors are increasingly linking deforestation to material risk. ESG performance is now scrutinised not just for environmental but also for financial resilience. 87% of institutional investors now consider ESG factors in their investment decisions, with deforestation being a key focus area.
Market access
Major brands, retailers, and investors demand deforestation-free products. A credible DCF commitment provides a competitive advantage. Moreover, A significant 73% of European consumers avoid brands linked to deforestation, highlighting the importance of sustainable sourcing for brand loyalty and revenue.
Future-proofing operations
Anticipating and aligning with emerging global regulations enables companies to take a proactive stance rather than a reactive scramble.
Environmental integrity
Agriculture is the leading driver of deforestation and ecosystem degradation. Preventing it helps mitigate climate change and biodiversity loss.
How do DCF commitments work in supply chains?
1. Cut-off date policy
Companies specify a cut-off date (e.g., Dec 31, 2020), after which any land conversion disqualifies the source. This aligns with global frameworks and provides a clear benchmark for meeting commitments.
2. Traceability
Companies map supply chains to the farm level. This requires geolocation data (GPS coordinates or polygons) of production areas. High-quality, plot-level data is critical to understanding exposure and managing downstream risks. It is important to note that, while geo points are easier to create, they do not accurately represent farm borders, which can lead to confusion in the analysis, such as false-positive risk flagging. This can occur, for example, when the farm is situated close to a national park. In the case of using polygons, it may be clear that there is no overlap with the protected area; however, using only a geo point with a perfect circle around it can make it seem as though there is overlap with the national park.
3. Risk assessment
Farms are assessed for deforestation or ecosystem conversion using satellite imagery, historical land-use data, and proximity to high-risk areas. These assessments can be automated or semi-automated, depending on scale.
4. Supplier engagement
Suppliers are trained and contractually obligated to comply with DCF policies and procedures. Remediation mechanisms are also established. Capacity-building is essential, especially when working with smallholder farmers.
5. Monitoring and verification
Companies implement ongoing monitoring, use deforestation alert systems, and may engage third-party verifiers to confirm they are meeting DCF standards. This ensures continued alignment and allows for timely interventions.
6. Transparency and reporting
Public disclosure of sourcing data, progress status of meeting commitments, and grievance mechanisms builds trust and aligns with stakeholder expectations. Reporting also supports investor engagement and brand positioning.
What you need to meet your DCF commitments
Cut-off date alignment
Align with widely accepted cut-off dates. This relates to the commitments you have. For example, the goal of having your sugar conversion-free by 2030. Make your policy publicly available. Clearly defined policies improve supplier alignment and audit readiness.
Accurate farm mapping
You cannot assess risk without knowing exactly where your products originate. Meridia’s Verify helps by verifying GPS data directly from producers, especially in fragmented or smallholder-dominated supply chains.
Clean and structured data
Field data must be cleaned, validated, and structured to ensure accuracy and consistency. Inconsistent records create data gaps. Meridia supports data cleaning and standardisation to ensure readiness for audit and monitoring tools.
Risk assessment
Assess deforestation risk using geospatial overlays, historical imagery, and land legal status. Meridia provides scalable risk assessments for companies handling thousands of supplier records. Integrated dashboards and custom reports accelerate decision-making. Verify includes a risk dashboard and actionable recommendations for risk mitigation.
Monitoring
Invest in satellite-based systems or collaborate with service providers like Meridia to flag deforestation events. Near-real-time risk assessment enables proactive responses and remediation.
Supplier engagement
Engage upstream suppliers through training, contractual terms, and remediation support to address issues that may hinder meeting DCF commitments. Building long-term relationships is key to addressing cultural and operational challenges.
Documentation and transparency
Maintain records of traceability data, risk analyses, supplier communications, and monitoring results to ensure transparency and accountability. Be ready to demonstrate due diligence to regulators and third parties. Transparency also builds consumer and investor confidence.
Challenges concerning DCF commitments
The complexity of achieving full traceability
The challenges related to DCF commitments are multifaceted, particularly in supply chains dominated by smallholders or fragmented structures. One of the primary difficulties lies in the complexity of achieving full traceability, especially when tracing products back to the plot or farm level. Clients of Meridia often underestimate the technical and logistical requirements of ensuring traceability in such environments. For smallholders, the lack of formal land documentation, digital records, and necessary infrastructure adds to the challenge, making accurate data collection difficult.
Scale of investment required
Another significant challenge is the scale of investment required for mapping, data management, and supplier engagement. These resource demands are often underestimated, resulting in gaps in the implementation process. Many clients of Meridia also discover that their supply chains are less compliant than initially believed, particularly in relation to indirect suppliers or conversion-free requirements. Mapping these indirect suppliers adds another layer of complexity due to the often opaque nature of their operations, which makes it challenging to monitor and ensure meeting DCF commitments.
A fragmented and smallholder-dominated supply chain
Lastly, smallholders face considerable obstacles due to limited financial and technical capacity. The lack of resources to implement the required mapping and monitoring systems can make meeting DCF commitments burdensome. This is compounded by the technical challenges of accurately collecting geolocation data, which are further hindered by resource constraints, lack of training, and poor infrastructure among smallholder communities. These factors collectively contribute to the challenging and resource-intensive task of meeting DCF commitments in afragmented and smallholder-dominated supply chains.
How Meridia supports DCF compliance
Meridia provides valuable support for companies working to operationalise DCF commitments:
- Data preparation and cleaning: structuring and validating supply chain data to meet DCF commitments.
- Risk assessments: automated and expert-reviewed analysis to flag risks and provide decision-ready insights.
- Audit readiness: ensuring data and documentation are fully aligned with DCF commitment requirements.
These services enable supply chain traceability, reduce the cost of due diligence, and provide peace of mind when navigating complex DCF requirements.
DCF commitments are voluntary but essential
DCF commitments are no longer merely aspirational. They are increasingly becoming essential for companies aiming to meet the expectations of regulators, consumers, and investors. While regulation is a major driver, growing pressure from end consumers and supply chain partners is also accelerating the shift.
Notably, getting your supply chain data in order does more than support meeting DCF commitments. It enables broader benefits such as improved decision-making, yield forecasting, and Scope 3 emissions calculation. A solid data foundation opens the door to wider sustainability and operational efficiencies. As regulatory, market, and environmental pressures converge, companies must evolve from pledges to practice.
By investing in traceability, accurate data, risk assessment, and supplier engagement, sustainability and compliance teams can transform environmental challenges into supply chain leadership.
