With deforestation still presenting global issues for climate change and biodiversity loss, the EU Deforestation Regulation aims to strengthen forest protection. Set to be fully enforced on December 30, 2024, the regulation includes strict and comprehensive requirements for a range of high-impact commodities. However, incomplete product coverage and increased compliance demands could have unintended impacts on forest conservation.

Regulation Overview

Regulation 2023/1115 of the European Parliament and the Council of the European Union (EU) came into effect on June 30, 2023, with an 18-month transition period. This means that companies have until December 30, 2024, to ensure their products and supply chains comply with the EU Deforestation Regulation (EUDR). All products either placed on or exported from the EU market must adhere to the EUDR’s standards.

The EUDR applies to a limited range of commodities considered high risk for deforestation, such as cattle, cocoa, coffee, palm oil, soya, and wood. The regulation’s central requirement is that these commodities must be “deforestation-free.” According to the EUDR, deforestation refers to the conversion of forest to agricultural land. Under the definition outlined in Article 6, deforestation-free means: 

• Products must be sourced from land that has not undergone deforestation after December 31, 2020.

• For products involving wood, the material must be harvested without causing forest degradation after December 31, 2020.

Additionally, covered commodities must comply with local laws regarding land use rights, environmental protection, and labor standards. Importers must also provide a due diligence statement that includes supply chain assessments to confirm compliance with the EUDR.

The Role of Companies in Compliance

Responsibility for compliance with the EUDR rests with the companies placing products on the EU market or exporting them. These businesses must ensure that their products are sustainably sourced and free of deforestation. 

Goals for Forest Conservation

According to the World Resources Institute’s 2024 Global Forest Review, the six commodities regulated by the EUDR contributed to over 50% of total deforestation between 2001 and 2015. Of these, cattle alone accounted for around 36% of deforestation, with much of this occurring in South America, particularly Brazil. Soya and palm oil are also major contributors, with palm oil deforestation concentrated in Southeast Asia, especially Indonesia and Malaysia. 

By focusing on these high-impact commodities, the EUDR aims to create the largest possible impact on global deforestation. Unlike the EU’s Timber Regulation, which only addressed illegal deforestation, the EUDR targets both legal and illegal deforestation, recognizing that deforestation laws vary across countries.

Challenges and Potential Drawbacks

While the regulation’s targeted focus on high-risk commodities is a crucial step for addressing deforestation, it also introduces complex challenges that could impact its overall effectiveness. 

"Leaky” Land Usage in Oil Crops

One significant issue is the limited scope of the EUDR in regulating only palm oil among oil crops. Palm oil is responsible for 25-30% of global deforestation between 2000 and 2016. Despite its destructive impact, palm oil’s high yield makes it more land-efficient than other oils like sunflower, rapeseed (canola), or coconut. If producers shift to these unregulated crops to avoid EUDR’s strict requirements, deforestation could worsen as they require more land to achieve the same yield as palm oil. This potential shift could undermine conservation efforts and destabilize regional economies that rely heavily on palm oil production, such as Indonesia and Malaysia.

Impact on Smallholders

Another concern is the burden placed on small-scale farmers, particularly in developing countries. Smallholders—farmers with less than 10 hectares of land—own only 25% of global agricultural land but produce 30% of the world’s crops. In regions where legal land ownership is difficult to prove, many smallholders may struggle to comply with EUDR’s strict documentation requirements. Without additional support, these communities risk being sidelined in favor of larger commercial producers, which could threaten their livelihoods and further entrench economic inequality.

Outlook for Forest Protection 

The EU Deforestation Regulation has the potential to make significant strides in forest conservation by requiring deforestation-free products and ensuring that local laws are respected. However, to be fully effective, the regulation must address its current gaps, particularly regarding the coverage of other high-risk crops and the challenges faced by smallholders. Proper support for indigenous and local communities, along with adjustments to the regulation’s scope, will be essential to achieving sustainable and equitable outcomes.

If successfully implemented, the EUDR could serve as a global model for forest protection and sustainable commodity production, raising the bar for environmental and social responsibility in the supply chains of one of the world’s largest markets.