EU legal framework might fail to apprehend significant forest destruction culprits, as per non-governmental organization's alert
The European Union's Deforestation Regulation (EUDR), set to come into effect on December 30, 2025, aims to prevent new tropical deforestation from Europe's supply chains for soy, beef, palm oil, and other commodities. However, concerns have been raised about the potential for major commodity firms to evade scrutiny during the regulation's enforcement.
According to a report by the UK-based investigative nonprofit, Earthsight, Europe's enforcers may be tempted to focus more on small companies, potentially neglecting the need to scrutinize the largest importers. This could lead to significant violations by major traders being overlooked, as they handle the bulk of commodities linked to deforestation.
To ensure an equitable focus on major commodity firms, the EU should implement several key measures. Firstly, oversight should be prioritized based on risk and impact. The EUDR includes a country benchmarking system classifying countries into high, standard, or low deforestation risk categories. This classification informs the level of due diligence required from companies and the intensity of enforcement by authorities, thereby targeting efforts where deforestation risk and related impacts are greatest.
Secondly, the focus should be on large commodity trader systems. While the largest importers may comply with due diligence submissions and have traceability systems, their mitigation measures and these systems may contain hidden flaws that require deeper investigation beyond surface-level compliance. Enforcement should therefore aim to uncover these weaknesses rather than simply check paperwork, which is often easier with smaller importers.
Thirdly, enforcement resource misallocation should be avoided. If enforcement agencies focus mainly on small importers (who are more easily checked), significant violations by major traders could be overlooked. This risks nullifying the effective prevention of deforestation.
Fourthly, proposals that limit enforcement scope should be rejected. Some EU countries have proposed adding a "no-risk" category of countries exempt from stringent requirements and reducing mandatory enforcement checks, which could lower scrutiny over major traders operating in supposedly safe regions. Maintaining rigorous and comprehensive enforcement irrespective of country categorization is crucial to avoid loopholes that large firms might exploit.
Lastly, the EUDR mandates geolocated data proving commodities are deforestation-free since December 2020, applicable to both direct and indirect suppliers. This standardized due diligence framework helps level the playing field and holds large firms accountable.
In conclusion, by combining these approaches—risk-based country classification, in-depth scrutiny of large commodity traders’ mitigation efforts, avoiding enforcement biases towards smaller entities, and resisting weakening of enforcement frameworks—the EU can ensure that the most significant actors in deforestation-linked commodity supply chains are effectively targeted, thus maximizing the Regulation’s impact in preventing deforestation.
It is important to note that the report by Earthsight expresses concern that there is reason to be mistrustful of such firms. The report suggests that while the largest importers may comply with the EUDR, their mitigation measures and traceability systems may have fundamental flaws that are well-hidden. For instance, Cargill, one of the largest exporters of soy from Brazil's Amazon Rainforest and Cerrado savanna, has pushed up its deforestation cutoff date from 2008 to 2020, potentially allowing 14 more years of deforestation without consequence.
Small companies may find it more challenging to comply with the EUDR due to a lack of financial and technical resources, according to experts. However, the relative cost for EUDR compliance is three times higher for small and medium-sized importers than for large importers, according to a report by Profundo. This disparity underscores the need for the EU to support small importers in meeting the requirements of the EUDR.
In light of these challenges, it is crucial for the EU to prioritize equitable enforcement of the EUDR, ensuring that both large and small importers are held accountable for their role in preventing deforestation.
- To counter concerns raised about major commodity firms evading scrutiny, the EU should prioritize risk-based country classification, focusing on high deforestation risk categories, in the implementation of the EUDR.
- It's essential to scrutinize large commodity trader systems beyond surface-level compliance, as their mitigation measures may contain hidden flaws that require deeper investigation.
- Enforcement resources should be allocated wisely, avoiding a bias towards small importers, as this could overlook significant violations by major traders, potentially nullifying the EUDR's effectiveness.
- Proposals that limit enforcement scope, such as exempting certain countries from stringent requirements or reducing mandatory checks, should be rejected to prevent large firms from exploiting potential loopholes.
- The EU should support small importers in meeting the requirements of the EUDR, recognizing the disparity in compliance costs between large and small importers while emphasizing the importance of equitable enforcement to prevent deforestation.
