Biodiversity | ~3 min read
Seeing the wood for the trees: EU deforestation rules take root
The latest update to the EU Deforestation Regulation (EUDR) suggests that, despite delays and ongoing debate, implementation remains firmly on track.
In July, the European Commission published an update to the EU Deforestation Regulation (EUDR) draft delegated act. This is a significant event, giving some much-needed clarity on the future implementation of the EUDR.
What is the EUDR?
The EUDR aims at “minimising the Union’s contribution to deforestation and forest degradation worldwide and thereby contributing to a reduction in global deforestation”1, while reducing EU greenhouse gas emissions and biodiversity loss. To achieve this, it requires importers into the EU to ensure listed goods are not linked to deforestation.
Why is it important?
The EUDR is a flagship element of EU environmental policy. Last November, implementation was delayed, with large and medium-sized companies now expected to comply from the end of 2026 and smaller operators from mid-2027.
The original list of products – cattle, cocoa, coffee, oil palm, rubber, soy, and wood – remains the same. The most notable proposed change is the removal of cattle hides, skins and leather from the list of cattle-derived products covered by the regulation. The Commission argues that leather is already covered indirectly because it forms part of the same supply chain as meat and is generally a low-value by-product.
What’s next?
Some NGOs and investor coalitions have voiced opposition to the current structure of the regulation, including the removal of leather from scope. Yet the latest proposals also confirm the Commission’s commitment to the text and year-end implementation timeline and suggest the EUDR is already influencing behaviour beyond Europe. The Commission cites several examples of producer countries strengthening traceability and forest governance, including Ethiopia's digital coffee traceability system, Ghana's cocoa traceability platform, and Brazil's Selo Verde monitoring system.
The UK is also developing its own deforestation due diligence regime for forest-risk commodities.
Together, these developments point to a wider effect: the EUDR may help improve disclosure, traceability and environmental data, giving investors better tools to assess and integrate deforestation risk in portfolios.
1 Article 1.a) of the Regulation 2023/1115 (https://eur-lex.europa.eu/eli/reg/2023/1115/oj/eng)
