EU Commission Proposes to Delay Application of EU Deforestation Regulation by One Year

This blog was originally posted on 8th October, 2024. Further regulatory developments may have occurred after publication. To keep up-to-date with the latest compliance news, sign up to our newsletter.

AUTHORED BY HANNAH JANKNECHT, REGULATORY COMPLIANCE SPECIALIST, COMPLIANCE & RISKS

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Introduction

In response to the growing calls for a postponement of the EU Deforestation Regulation (EUDR), the EU Commission proposed on 2 October 2024 to delay the application of the EUDR by one year.

In this blog, we discuss the details of the proposed delay.

Background

The EU Deforestation Regulation was adopted on 31 May 2023 and came into force on 29 June 2023. The goal of the regulation is to curb the EU’s impact on global deforestation and forest degradation and reduce greenhouse gas emissions and biodiversity loss due to deforestation. To this end, commodities and products in scope of the EUDR are only allowed to be placed on the EU market or made available if they are deforestation-free and produced in accordance with the laws of the country of production. The Regulation covers the seven commodities cocoa, coffee, soy, cattle, wood, rubber and oil palm as well as a list of derived products. 

The requirements of the EUDR pose a number of challenges for manufacturers and importers, who will have to establish a due diligence system to demonstrate that no or only a negligible risk of deforestation exists. As part of the due diligence system, manufacturers and importers subject to the EUDR are required to collect information on their products and suppliers, including the geolocation of the land on which the commodities have been produced.

Proposed Delay

Calls for a delay of the EU Deforestation Regulation from industry associations, EU member state ministries and non-EU governments have intensified over recent months. Key factors contributing to this are the technical challenges posed by the traceability requirements and the lack of information regarding the benchmarking system and enforcement.

In response, the EU Commission proposed on 2 October to postpone compliance with the regulation to 30 December 2025 for large and medium-sized companies, while small and micro enterprises would have to comply by 30 June 2026. According to the EU Commission, the extra 12 months will serve as a phasing-in period to ensure proper and effective implementation of the Regulation.

In addition, the EU Commission announced its plan to finalize the country benchmarking system by 30 June 2025. The country benchmarking system assigns a low, standard or high risk of deforestation per country. Products and commodities produced in a country with a low risk of deforestation are subject to a simplified due diligence procedure. The EU Commission also decided that the majority of countries will be classified as low-risk, providing the opportunity to focus resources on those areas with the highest risk of deforestation.

Additional Resources

Due to some open questions concerning the application and scope of the EUDR, the EU Commission published another guidance document. The guidance document offers examples for various application scenarios, explanations for specific products, and recommendations for maintaining the due diligence system. At the same time, the existing FAQ document has been updated with information on penalties and enforcement. 

What’s Next?

The Commission proposal to delay compliance with the EUDR needs to be approved by the European Parliament and the Council before the end of the year. While, considering the extent of the missing information, an adoption of the amendment seems likely, companies in scope of the EUDR continue to struggle with uncertainty in the meantime.

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