EU eases rules for small firms on deforestation

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The European Commission has proposed amendments to the EU Deforestation Regulation (EUDR), which aims to ensure products imported to or exported from EU markets do not contribute to global deforestation or forest degradation. Key changes include removing due diligence obligations for many retailers and manufacturers, and for smaller companies in low-risk countries.

Despite a recent proposal to delay the EUDR’s implementation by a year, the Commission plans to enforce the regulation by the end of this year. Large companies will receive a six-month grace period for compliance, and small enterprises will not be covered until the end of 2026.

Initially introduced in November 2021, the EUDR seeks to ban deforestation-linked products from the EU market and establish stringent compliance requirements for companies dealing in key commodities such as palm oil, beef, timber, coffee, cocoa, rubber, and soy, along with derived products like leather, chocolate, tyres, and furniture. Companies must now trace products back to their production land, ensuring no deforestation post-2020 and compliance with relevant laws of the production country.

Previously, EU Commissioner Jessika Roswall suggested a delay due to concerns about IT systems’ capacity to handle the new data load. The regulation faced another setback when Parliament MEPs rejected the benchmarking system categorising countries by deforestation risk.

The new proposal aims to simplify obligations, especially for micro and small operators in low-risk countries, ensuring the IT system’s full operational capacity. Reporting obligations will focus on operators placing EUDR products on the market, eliminating the need for downstream operators to submit multiple due diligence statements. For instance, cocoa beans will require only one due diligence statement from the importer, exempting downstream chocolate manufacturers from additional submissions.

Micro and small primary operators will need only a simple, one-off declaration in the EUDR IT system, and if information is already available, no further action is required. Almost all farmers and foresters in the EU fall into this category.

The proposal requires formal adoption by the EU Parliament and Council to take effect. The Commission urges swift adoption and is preparing contingency plans if not adopted in time. Teresa Ribera, EU Commission Executive Vice-President for Clean, Just and Competitive Transition, emphasised the streamlined process for micro and small producers, offering a clear implementation schedule to ensure seamless regulation commencement.

Environmental groups, such as the WWF, criticised the changes, arguing they increase deforestation and illegality risks in supply chains. Anke Schulmeister-Oldenhove of WWF criticised the revisions as undermining efforts for deforestation-free supply chains, stressing the importance of forests for climate stability, biodiversity, and human rights.