Why This Imperfect Law Is the Best Shot at Fighting Deforestation

Time may be running out for companies doing business in Europe to trace the origins of ingredients in everything from lipstick to soap, as the E.U. looks set to take up the fight against the global scourge of deforestation. The landmark E.U. Deforestation Regulation (EUDR) is scheduled to go into force at the start of next year, potentially shaking up billions in global trade.  

At the heart of the EUDR is a simple but ambitious goal: to reduce deforestation, and therefore curb climate change. The regulation demands that companies look deep into their supply chains to ensure nothing is sourced from deforested lands anywhere in the world. The idea has garnered widespread support from environmentalists and even some multinational corporations.   

But not everyone is on board. For global conglomerates with tens of thousands of suppliers, the task of compliance is daunting enough. For smaller companies, it’s nearly impossible. Most of them rely on a few key suppliers and don’t have the clout or systems to track anything beyond that first layer. It’s like asking them to trace every ingredient in a recipe when they’re barely keeping up with the grocery list.

The complexity raises serious concerns about bureaucracy. How much red tape is too much? Larger European firms are already struggling with the burden of sustainability reporting. There’s a genuine fear they’ll get more bogged down in paperwork and processes, losing valuable time and resources that could be better spent on actually finding greener, sustainable solutions.

This creates a real risk: instead of helping smaller suppliers improve their practices, EUDR could actually push them out of the global supply chain. And regions like Southeast Asia, Latin America, and Africa might get sidelined as big European companies shift to suppliers in areas with stronger deforestation regulations, like Norway, Finland, and New Zealand. 

Developing countries are already arguing they’re being unfairly hit by EUDR’s rules, which they say could hurt their economies by making it harder for them to compete in global markets. Some have even called the legislation “discriminatory and punitive.”

All of this helps explains why EUDR’s future is still not quite certain. The legislation passed in June but last month the European Commission proposed to delay its implementation for 12 months, raising questions about when or even if EUDR will go ahead.

Yet the landmark regulation remains the best solution we have to fight deforestation. Other approaches like carbon offsets—Swiss Post scooping up a 2,400-hectare woodland in Germany last year is a prime example—have been fiercely criticized. “Sadly, the way out of the climate emergency is just not that simple,” Greenpeace has said. Others have called carbon offsets a “license to pollute,” stoking the already fiery debate over greenwashing.

And for all the real challenges that EUDR poses, technology might have some of the answers. AI-powered tools like Prewave are popping up as potential solutions to tackle supply chain challenges. These systems sift through data to assess risks, flag compliance issues, and streamline audits. AI relies on solid data, and that’s tough to come by in areas hit hardest by deforestation. So, it’s not a magic fix, but a start. 

The EUDR could set a global precedent, with Europe already leading the charge on sustainability. Yet even if it goes ahead, its exact impact remains a question-mark. The EUDR could pave the way for a more sustainable world, or it could spark a new wave of protectionism, with countries turning inward to avoid the high costs of compliance.

Either way, companies doing business in Europe would need to adapt—and fast.