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Potential 12-Month Delay in EUDR Implementation

Potential 12-Month Delay in EUDR Implementation

Client Alert

There is a strong likelihood that the European Union Deforestation Regulation (EUDR) will face a 12-month delay following heavy lobbying by international governments and businesses.

This regulation, which applies to many companies with turnover in the EU and dealing in the commodities below, was initially set to come into force at the end of 2024. If approved by the European Parliament and Council, the new implementation timeline will be Dec. 30, 2025, for large companies and June 30, 2026, for micro and small enterprises.

 

The EUDR aims to curb deforestation by banning the sale of commodities such as cattle, cocoa, coffee, soya, palm oil, rubber, and timber, unless businesses can prove that their production processes have not contributed to deforestation after Dec. 31, 2020. The regulation affects a wide array of industries, from agriculture to retail, and impacts any relevant company with EU-based operations or sales.

Why Companies Must Remain Focused Despite the Delay

While this delay may provide companies additional time to comply with the stringent supply chain transparency requirements, it is critical to note that similar regulations are already in place or moving forward in parallel. For example:

 

  • The UK Forest Risk Commodities Regulation requires businesses to ensure that key commodities are not sourced from illegally deforested land.
  • The German Supply Chain Due Diligence Act (LkSG) mandates large companies to monitor environmental risks and report known crimes, including deforestation, across their supply chains.
  • The European Union Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive (CSDDD) part of the green deal initiative.

 

These regulations underscore the need for businesses with operations in these regions to continue their supply chain mapping efforts. Even in countries without such regulations, growing consumer demand for transparency and responsible sourcing means companies cannot afford to relax.

How Exiger’s Technology Can Streamline EUDR Compliance

At Exiger, we are advancing our EUDR solution by continuously identifying and integrating the most comprehensive deforestation databases. This ensures that our clients receive accurate, timely, and actionable insights, empowering them to make informed and sustainable decisions.

 

The figures below demonstrate key mapping capabilities. The first map illustrates global forest cover data, serving as a reference point for deforestation after 2020, while the second map zooms in on South America, highlighting key risk countries and territorial deforestation in critical regions using data from Trase Earth. Darker red areas represent more severe deforestation, orange indicates moderate levels, and yellow signifies low deforestation. This data is useful in identifying where suppliers are located and if they are operating in high-risk areas.

 

As we continue refining our solutions, these tools provide our clients with the precision and insight necessary to navigate such complex and evolving regulations.

Figure 1
Figure 2

Key Updates

  • Delay Justification: The European Commission argues that the extension will allow operators, especially in regions like Brazil, Indonesia, and Ivory Coast, to align with the EUDR requirements, particularly small-scale farmers who may face challenges in compliance.
  • Environmental Concerns: Critics, including Virginijus Sinkevičius, a former EU Environment Commissioner, have warned that delaying the EUDR will significantly harm global efforts to combat deforestation, with over 80,000 acres of forest at risk daily.

Best Next Steps for Companies

  • Assess Your Supply Chain: Continue reviewing and mapping your global supply chains for risks linked to deforestation and other environmental risks. This should include mapping the origins of commodities and using technology to monitor environmental impacts.
  • Leverage Available Technologies: Use multi-tier corporate entity and geolocation mapping, satellite monitoring and data analysis to ensure supply chain risk understanding and compliance with global ESG regulations. Early adoption of these tools could provide a competitive edge when regulations are fully enforced.
  • Engage with Stakeholders: Maintain ongoing communication with customers, suppliers, trade bodies, and regulators to stay ahead of changing environmental standards and any further delays or updates to the regulations.
  • Stay Compliant with Global Regulations: Even with the EUDR delay, other laws such as the UK Forest Risk Commodities Regulation and the German Supply Chain Act remain in force, requiring immediate compliance. Businesses with turnover in the EU or other regions with stringent environmental laws should not lose momentum in preparing for these requirements.

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