The European Commission officially announced a delay in the implementation of the European Union Deforestation Regulation (EUDR). This new law is aimed at ensuring that all imports and exports of products from the EU market no longer contribute to forest degradation and deforestation globally. The deforestation law was delayed from December 30, 2024, to December 30, 2025, with micro and small enterprises having more time too. While it delayed the new agreement, the EU rejected the Parliament's proposal to ease the new rules.
Private equity/credit companies, asset managers, and impact investors with portfolios of companies that trade products from cattle, wood, cocoa, soy, palm oil, rubber, coffee, and some other derived products under Europe will now have more time to comply with the deforestation law. This will help companies to implement the rules more smoothly from the beginning without undermining any objectives of the law.
Let's discuss the delay of EUDR in detail.
Timeline of EUDR implementation
The EUDR was first introduced by the EU in November 2021, with proposals aimed at effectively banning deforestation-linked projects and establishing strong compliance requirements for companies on the EU market. The regulation then entered into effect from June 2023, giving companies over 18 months to implement the new rules, which would become applicable by December 30, 2024, and June 30, 2025, for micro and small enterprises.
However, in October, the European Commission proposed a one-year delay to new rules, which is now officially agreed with large operators, and traders will now have to respect the obligations of EUDR as of December 30, 2025, with micro and small enterprises having time till June 30, 2026.
Following the agreement, Parliament's rapporteur, Christine Schneider, said, "We promised, and we have delivered. This postponement means businesses, foresters, farmers and authorities will have an additional year to prepare. We ensured the Commission will complete the online platform and the risk categorisation in six months, ensuring more predictability across the supply chain. An impact assessment and further simplification is to follow in the review stage for the low risk countries or regions providing countries with an incentive to improve their forest conservation practices.
We would have preferred to see several issues directly enshrined in the law, but the Council refused. It is now up to the Commission to deliver on its commitments. We MEPs will closely monitor this process, in particular efforts towards reducing bureaucracy."
Key points of the one-year delay of EUDR
- The delay will allow third countries, member states, traders, and operators to be fully prepared in terms of due diligence requirements for specific commodities and products sold or supplied in the EU that are deforestation-free.
- The new agreement turned down Parliament's plan to loosen the regulations ensuring it is unchanged by establishing a "no risk" category that would remove nations deemed to pose minimal risk of deforestation from the majority of EUDR criteria.
- Many agricultural and environmental ministers from several EU countries supported the decision to delay. However, Environmental groups have expressed concerns that this delay could lead to significant forest loss, estimating a potential destruction of around 2,300 to 2,500 square kilometers of forests.
What's next
In order for the postponed EUDR to enter into force, the agreed text has to be endorsed by both Parliament and the Council, and the provisional agreement to delay still needs to be confirmed.
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