What would it take for the EU Deforestation Regulation to work?

Why has the EUDR faced so much criticism?

One of the EU flagship initiatives, the Deforestation Regulation, deserved a less bumpy execution considering the importance of its objective and the consensus about the need to effectively tackle global deforestation. In late 2024, the EU institutions adopted a one-year postponement of the Regulation perilously close to the foreseen date of application, with a promise of no-repeat. It was hence a surprise to some when, more recently, the Commission announced it was considering a new postponement due to a lack of capacity of the Commission’s IT system, without which companies cannot comply with core requirements.

Much of this results from the design of the Regulation, which is ill-suited to accommodate the dynamic and efficient organisation of certain supply chains or the fragmentation and specific challenges faced by others. Nonetheless, various companies invested heavily in setting up due diligence systems and practices aligned with the EUDR’s requirements to the best of their knowledge, despite remaining uncertainties but also fundamental problems which arise from some of the Regulation’s provisions.  Businesses are as before, calling on the Commission and Member States to ensure predictability, legal clarity, implementation simplifications, and harmonised enforcement, whatever the political and legislative path chosen to achieve this. Only then will the Regulation become workable and successful.

How can we constructively move ahead?

With uncertainty still being the order of the day, it remains critical to solve the remaining issues which to date have not been resolved with the Commission’s FAQs and guidance. Much progress could be achieved by solving the problems highlighted below.

Simplifying implementation of some provisions

While the Commission’s work on clarifying and simplifying provisions through its FAQs and guidance provided some improvements, not all critical points were addressed effectively. And, even when addressed, not all recommended simplifications have been taken up by competent authorities.

One of the most challenging aspects of compliance relates to the requirement to provide evidence of compliance with the relevant national laws of producing countries. Despite the Commission’s apparent introduction of some flexibility on the variety of documents and methods that may be used to show compliance in its Guidance document, in practice, the interpretation of this requirement by certain Member State competent authorities has departed from a proportionate risk-based due diligence assessment approach, resulting in requests for first-hand legal documents for every plot of land, ignoring alternative methods for concluding no or negligible risk of non-compliance.

Other challenging provisions, due to their lack of clarity and uncertain interpretations, have repercussions on the timing of submitting due diligence statements, which may not be in line with the timing of supply chain logistics, or on the way that information is accounted in companies’ Resource Enterprise Planning systems. These are technical points that have strong implications for how companies run their supply chains, and failing to simplify the implementation of certain provisions risks adding further blockages and inefficiencies without any added benefit. Simplification work must therefore be accelerated.

Ensuring harmonised enforcement by all 27 Member States

As illustrated by the example above of the legality requirement, certain Commission simplifications have been insufficiently adopted and included in national interpretations of implementation guidelines. The resulting lack of harmonised enforcement of the Regulation, with some Member States taking a much stricter approach, presents risks for operators’ competitiveness, the functioning of the EU Single Market, and for ensuring a common level playing field. The persistent lack of legal certainty, of harmonised simplified implementation, and of leadership in solving problem areas of the Regulation leave operators and traders doing their best and acting in good faith, exposed to uneven treatment across the EU and to important potential liabilities. All authorities must accelerate their work towards converging practical and simplified implementation of the rules and providing visibility and certainty to all actors in the chain about requirements for EUDR compliance.

Allowing public and private schemes to play a greater role without outsourcing responsibility

Experience with preparation for EUDR implementation has demonstrated the value of national and private schemes combined with reliable verification controls in providing evidence of compliance with the Regulation. Such schemes enable access by auditors to first-hand legal documentation, which the schemes themselves cannot normally share with operators systematically, particularly as some of these documents are sensitive for the farmers. However, the Regulation relegates such schemes to complementary sources of information although they often have a better and more efficient ability to organise the verification of information. A strict interpretation of this limitation would imply that companies need to duplicate the work of such schemes, rendering the latter redundant.

Therefore, while the liability for compliance should remain with operators, the role of certification schemes in the collection and verification of evidence by accredited independent third parties should be recognised, meaning that audit reports resulting from the certification process should be accepted as evidence as long as operators can provide evidence of their credibility and robustness as part of their risk assessment.

Accelerating and enhancing engagement with producing countries on remaining gaps

Some of the issues that obstruct implementation go beyond the remit and power of companies and must urgently be tackled at a diplomatic level between the Commission and producing countries. This includes the sensitive topic of the sharing of geolocation information, which some countries have objected to, as well as the need to work constructively to assess what laws are relevant to meet the legality requirement and what types of evidence are reasonably available to provide sufficient proof of compliance.

The EU institutions, producing countries, and supply chain actors must work together to avoid uncertainty and to make the EUDR work for all

Economic operators urgently need certainty about the legal framework as well as how and when the Commission plans to resolve remaining issues. It is clear that more work needs to be done to solve all remaining issues, but we cannot afford to lag, at the risk of either not seeing this flagship Regulation come to life or alternatively a chaotic and confused beginning of application. The latter scenario would be detrimental to economic operators, to EU food security and ultimately to EU consumers. Solutions exist, and it is the responsibility of all parties to work together swiftly to adopt them.