The EU Deforestation Regulation (EUDR) covers cattle, cocoa, coffee, oil palm, rubber, soy(a) and wood, as well as many derived products. The Regulation is currently scheduled to apply to operators and traders beginning at year-end.
In late 2024, EUDR compliance was pushed back by a year, giving companies much needed breathing room to prepare. In May, the European Commission reduced companies’ due diligence obligations by designating the majority of countries as low risk. It also recently published new guidance intended to simplify and reduce the administrative burden of complying with the EUDR. However, the EUDR remains controversial and additional changes are likely, as discussed in this post.
Expect Another Omnibus Simplification Proposal from the European Commission
According to recent media sources – credit goes to Fiona McNally at Responsible Investor (here is the link for RI subscribers) – the European Commission is planning a call for evidence on an environmental omnibus proposal, which is expected to result in an environmental omnibus simplification package in the fall. According to RI, this omnibus would among other things sweep in the EUDR.
As is the case with the simplification of the Corporate Sustainability Due Diligence Directive, EUDR simplification is likely to be contentious. However, “stop the clock” proposals pending simplification have not been nearly as contentious.
Recent activity in the Council and Parliament and by some member states provide a sense of what may be part of an EUDR simplification proposal.
The Council and Member States
May 26 Agriculture and Fisheries Council Meeting
A short position paper, titled Simplification of the EU Deforestation Regulation (EUDR): difficulties in implementing the EUDR and the need for substantial simplification, was submitted by Luxembourg and Austria for discussion at the May 26 meeting of the Agriculture and Fisheries Council (AGRIFISH). The Agriculture and Fisheries Council is one of the configurations of the European Council, comprised of the agriculture and fisheries ministers of the EU member states. The paper was supported by Bulgaria, Croatia, Czechia, Finland, Italy, Latvia, Portugal, Romania and Slovenia.
The submission asserts that the requirements imposed on farmers and foresters by the EUDR remain high, may be impossible to implement and are disproportionate to the objective of the Regulation. The submission calls on the European Commission to include the EUDR in its simplification plans and, pending the Commission's proposals, further postpone the start date of the EUDR.
The submission suggests several ways in which the EUDR could be simplified, including:
- Not requiring operators to record geolocation information in countries or regions with insignificant deforestation risk, and not requiring competent authorities to carry out checks on products from those countries;
- For countries or regions with insignificant risk, allowing for a regulated compensation mechanism applicable outside areas of primary or protected forests with high biodiversity value, where deforestation could be offset by certified afforestation of an equivalent area in the same country to maintain or increase the wooded area of a defined zone;
- Allowing for controls based solely on a risk analysis;
- Reducing reporting and documentation requirements to the declaration of the surface area for any corrective action plan put in place; and
- Implementing strict controls on imported products to minimize the risk of fraud.
July 7 Agriculture Ministers Joint Letter
On July 7, 18 Ministers of Agriculture published a joint letter calling for the further simplification of the EUDR. The signatories urge the European Commission to swiftly include the EUDR in its simplification plans and, pending the Commission's simplification proposals, to consider further postponing compliance. The letter was signed by the Ministers of Austria, Bulgaria, Croatia, Czech Republic, Estonia, Finland, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Poland, Portugal, Romania, Slovakia, Slovenia and Sweden. Although more member states than signed on to the paper submitted to AGRIFISH, notably, France, Germany and Spain (among other EU member states) did not sign on to the letter.
The letter expresses the view that the EUDR in its current form does not sufficiently take into account countries with effective forest protection laws and a negligible risk of deforestation, instead imposing disproportionate bureaucratic obligations on those countries. The letter also expresses the view that full EUDR traceability within the EU market will be extremely difficult if not impossible for some companies.
The letter is short on policy proposals, but it does call for excessive and redundant due diligence requirements to be removed in countries where agricultural expansion is not significantly reducing the forest area. In countries which have been designated as being at low risk of deforestation, the letter indicates that it should be accepted that existing national systems are sufficiently robust to demonstrate that compliance with the EUDR can be properly controlled.
The Parliament
On July 9, the European Parliament voted in favor of a resolution objecting to the country risk classifications adopted by the European Commission in May (see this Ropes & Gray post). The resolution – introduced by Austrian EPP Member of Parliament Alexander Bernhuber – passed with 373 Members of Parliament voting in favor, with 289 against and 26 abstentions. The resolution, which is not binding on the Commission, calls on it to:
- Repeal the country classifications adopted by the Commission in May;
- Revise the country benchmarking system to ensure it is based on up-to-date data, allows for regional differentiation and includes transparent weighting of risk indicators;
- Establish clear, time-bound and transparent procedures for regularly reassessing country risk categorizations based on measurable progress and updated scientific data;
- Engage with countries producing relevant commodities and stakeholders through inclusive and participatory processes, and provide support for forest governance reforms and traceability systems; and
- Implement complementary measures, such as forest partnerships, technical assistance and fair trade incentives.
The Council position paper advocates for some of the same changes.
Some of the concerns cited in the resolution include the following:
- Data quality and methodological robustness
- The proposed country risk categorization does not accurately reflect current realities in the countries concerned, including relating to land-use dynamics and forest degradation, key developments in governance, deforestation trends and enforcement mechanisms or recent national efforts to prevent deforestation, updated land-use policies or real-time satellite monitoring improvements.
- Regional variability within countries is not accounted for.
- The risk categorization methodology is flawed because it focuses primarily on aggregate historical deforestation rates and does not provide sufficient flexibility to accommodate timely updates.
- There are not clear pathways for countries to have their risk categorization changed through demonstrable progress.
- Low risk country category
- The use of net forest loss between 2015 and 2020 to determine risk category considers total forest area loss rather than deforestation, thus including areas of temporary forest cover change or forest management not associated with land-use conversion.
- There is not a clear rationale for the values used in the risk categorization methodology (noting in particular that the United States falls just below the absolute low risk threshold and that this raises questions about the objectivity and robustness of the chosen benchmarks).
- The assessment of deforestation risk based on the expansion of cropland areas used for relevant commodities and the scale of livestock and wood production lacks precision.
- The inclusion of overall wood production as a proxy for deforestation risks conflates lawful forestry activities with deforestation driven by land-use change.
- Lack of granularity and context sensitivity
- The current system of three risk categories is insufficient to adequately differentiate between countries with vastly different levels of deforestation risk.
- The lack of a nuanced approach could undermine the incentive for more ambitious governments to take further action.
- The Commission should consider introducing a fourth “negligible risk” category to reflect that in certain countries or regions the risk of deforestation or forest degradation is effectively negligible due to robust legal frameworks, low land-use change dynamics and sustainable land management practices.
- The current system risks oversimplifying deforestation risk by granting low risk status to countries based on outdated data or national averages, which could create a false sense of security and potentially reduce the due diligence obligation for products originating from areas where illegal deforestation persists.
- Although current data shows a localized increase in deforestation in certain regions, this development underscores the need for granular region-specific monitoring rather than static national risk classifications.
- Credible research and long-term studies demonstrate the complexity and variability of deforestation dynamics driven by political cycles, enforcement levels and local socio-economic conditions, which supports the need for a more adaptive, context-sensitive approach rather than country benchmarks.
- The current risk classification model fails to account for the volatility of global commodity markets, where price fluctuations, trade dynamics and demand shifts can rapidly alter deforestation pressures.
- The risk classification should allow for the creation of a regulated compensation mechanism, applicable exclusively outside of primary or high-biodiversity areas.
- Fairness, legitimacy and global engagement
- The current country benchmarking system may disincentivize cooperation and data sharing by countries producing relevant commodities, particularly if they perceive the risk categorization as unfair or politically motivated.
- Environmental and civil society organizations from countries producing relevant commodities have raised concerns about the lack of inclusive consultation in the development of the country benchmarking system, highlighting the importance of participatory processes that involve indigenous communities, local stakeholders and regional authorities.
About the Deforestation Regulation
The EUDR covers cattle, cocoa, coffee, oil palm, rubber, soy(a) and wood, as well as many derived products. The Regulation begins to apply to operators and traders on December 30. For further information on the Deforestation Regulation, see these Ropes & Gray posts (among others on this topic):
