The coffee you have in the morning, the steak you eat for dinner, the chair you sit on at work: Many everyday products contribute to deforestation and forest degradation — in the European Union and worldwide. The health of forests, which cover 31% of land on the planet, is essential to the fight against climate change and for preserving biodiversity. As carbon sinks, forests are a way to absorb the carbon dioxide that is warming the atmosphere to dangerous levels.
To combat the loss of trees around the globe, legislators approved the EU deforestation regulation (EUDR) last year. The law was set to apply to medium and large operators by the end of this year and mid-next year for smaller companies. Now, it may be postponed: Last week, the Commission proposed delaying the application of the law by 12 months, citing criticism foremost from companies and industry groups.
They say they are ill-prepared for its implementation, but environmentalists have blasted the move as “taking place in the context of the greatest destruction of forests on the Latin American continent in recent years,” Greens MEP Anna Cavazzini said in a recent statement, referring to the Amazon, which is particularly vulnerable to deforestation.
During passage last year, the law received strong support in the European Parliament. It passed with 552 votes in favor. The Council’s approval followed shortly thereafter, with the legislation entering into force in June 2023.
What does the EU deforestation regulation cover?
The EUDR is a central component to the heap of regulation that comprise the Green Deal, which aims to make the EU climate neutral by 2050. The Commission describes the EUDR as a “key building block in the fight against climate change and biodiversity loss.”
Under the legislation, operators and traders that want to do business in the EU have to prove that a certain list of products has not come from deforested land or contributed to the degradation of forests. The latter term refers to forests that have been somehow changed from their original state.
Items on that list include palm oil, cattle, soy, coffee, cocoa, timber and rubber, as well as products that derive from those commodities, such as beef and furniture. The law is retroactive to the end of 2020.
Lawmakers focused on these items because they are “associated with a high level of deforestation across the world,” Antoine Oger, research director at the Institute for European Environmental Policy, a Brussels-based think tank, told The Parliament. “That is one of the main environmental impacts that we are facing at the moment.”
The Commission has tasked the institute with providing an impact assessment of the law, including the possibility of expanding the list of products it covers. These findings are to be published in the spring.
How is the EUDR supposed to work?
The United Nations Food and Agriculture Organization estimates that 420 million hectares of forest — an area larger than the EU — were lost due to deforestation between 1990 and 2020. Agriculture remains the primary cause of deforestation and forest degradation. Between 2005 and 2013, beef production caused 41% of deforestation worldwide.
In its most ideal form, the regulation “means that when I buy a piece of beef in a European supermarket, I can be sure that that particular piece of beef cannot be associated with deforestation anywhere in the world,” Oger said. “That's quite innovative.”
The regulation is an example of the EU’s regulatory weight in the world, since it can influence how companies everywhere do business. Many details remain unclear, however, such as the metrics the Commission will use to assess “risk” when it comes to deforestation in a given country. Companies based in higher risk countries will have to meet a higher bar of compliance
Businesses have to provide a due diligence statement, which includes country of production, the product’s quantities and the location of all plots of land where the relevant commodities were produced. In the case of beef, producers must state where the cattle were kept.
On the import side, such as at EU ports in Rotterdam or Antwerp, authorities are required to carry out spot checks. Depending on risk level, these apply to anywhere between 1%-to-9% of incoming goods. The due diligence report is then checked against where deforestation has taken place since the end of 2020.
Products found in violation would be barred from entering the EU. Violation of the regulation risks a fine of at least 4% of annual turnover in the EU.
Why was the regulation delayed?
Like any regulation, there are bound to be unintended consequences. Companies may opt to avoid the added bureaucracy and redirect their wares to domestic markets. In many cases that results in lower revenue, which could lead producers to “cut more land to produce more, to sell more to make more profit,” Cláudia Azevedo, a green trade policy analyst at Brussels-based think tank Europe Jacques Delors, told The Parliament.
Or they could take their goods elsewhere, she added. While the EU’s single market is big – it is the second-largest destination for Brazilian agribusiness – it is not the only place to make money. China is a heavyweight and does not demand such regulations, for example.
The Commission is addressing concerns from international partners that said they felt unsupported in their preparations to comply with the regulation. In a joint statement in September, industry groups said the regulation was important but their members "are still grappling with severe legal and market uncertainties.”
Supply-chain adjustments were happening too “last minute,” they said.
As one of the countries most impacted by the regulation, Brazil asked the Commission to revise the regulation, citing its impact on nearly one-third its exports to the EU. Member states, too, have urged caution, with German Chancellor Olaf Scholz calling to suspend implementation “until the open questions” were addressed.
In response to the pressure, the Commission has proposed pushing implementation back a year — until end of 2025 for larger companies and mid-2026 for smaller ones. That would need the approval of the parliament and member states, which environmental groups hope will not happen.
“Ursula von der Leyen might as well have wielded the chainsaw herself,” Sébastien Risso, the EU forest policy director of Greenpeace, said in a statement. “It’s inexcusable that the Commission took so long to issue the supporting documents for the implementation of the law. The world’s forests urgently need the protection that this law offers.”