Intercontinental Exchange (ICE) plans to launch the ICE Commodity Traceability (ICoT) service, which will help coffee and cocoa companies comply with European Union regulations for deforestation and forest degradation.
ICE’s Benchmark Administration Limited's goal is to launch the new tracking service in 2024, ahead of the application of the EU regulations set to begin in December 2024. The EU’s recently released rules aim to guarantee that EU consumer products will not contribute to worldwide deforestation. The ICoT service will support customers in the coffee and cocoa industries in meeting the new regulations.
“Recognizing ICE’s established position in the cocoa and coffee markets, where the benchmark prices for these commodities are formed every day, ICE has been working closely with the industry to design a solution to help customers meet the requirements of the deforestation regulation. This includes the need to receive and verify supply chain data from sellers when entering into transactions,” said Toby Brandon, senior director of ICE soft commodity operations.
Brandon continued by noting that significant investments have been made in supply chain sustainability for ICE’s customers, stakeholders, and countries where coffee and cocoa are grown. By having a single, standardized platform, customers may access multiple technologies which provide farm location and traceability data that the new deforestation regulations require. ICoT will validate the gathered data in order for cocoa and coffee to be traded and placed on the EU market.
According to a report by the CDP, addressing deforestation is key to advancing toward net-zero goals. They recommend implementing tactics, such as using the ICoT service, to decrease deforestation across corporate supply chains.
Deforestation is mainly driven by expanding agricultural land linked to the production of coffee, cocoa, and other commodities such as palm oil, soy, and cattle. The EU takes considerable responsibility for this as major consumers of such commodities and has made new regulations accordingly.
ICE's Cocoa, London Cocoa, Coffee C, and Robusta Coffee contracts are the largest in the global coffee market. They will have to make supply chain changes based on regulations such as these, and systems like the ICoT will help them meet those standards.
