The European Union Parliament recently voted to delay the EUDR’s implementation till the 31st of December 2025. This decision affords businesses producing and taking commodities such as Cocoa, Soybeans, Oil palm, Timber, Rubber, Coffee, and Cattle into the EU market more time to achieve EUDR compliance.
Under the new timeline, large businesses trading in the abovementioned commodities now have until December 30, 2025, to comply with the EUDR while small and micro-enterprises have until June 30, 2026, to meet the requirements.
The EU extended the deadline to address uneven preparedness among its member states and trading partners. Pushback from stakeholders in the affected indicates a widespread lack of readiness which played a significant role in the decision.
Moreover, the classification of countries into risk categories is another crucial aspect of the regulation that the commission has yet to finalise. Identifying and placing countries in the right categories is vital for ensuring the regulation’s effectiveness across diverse market realities.
But, the decision to extend the EUDR timeline is a double-edged sword. Even with its perks, it raises sustainability concerns. The extension may offer breathing room for cocoa and other commodity supply chains but, it risks delaying urgent action on sustainability goals.
Let’s examine the doubled-edged implications of the EUDR extension and what companies should do with the additional time to balance compliance and sustainability.
The Extension as a Lifeline for Commodity Supply Chains
Commodity producers, particularly in developing regions like West Africa, have struggled to meet the stringent traceability and sustainability requirements of the EUDR. The majority of players in these supply chains are smallholder farmers and local buying agents, who often lack access to the technology, resources, and knowledge necessary for compliance.
The extension is a good turn of events for these players as it affords them more time to adopt all the necessary systems.
Moreover, the extension creates an opportunity for industries to address systemic issues such as fair wages and the living income gap for farmers.
The Extension as a Potential Setback for Sustainability
On the flip side, there are concerns over the extension’s impact on sustainability advocacy.
There’s widespread scepticism that the extension of the EUDR may slow momentum toward combating deforestation and environmental degradation. Prior to the extension, the looming compliance deadlines drove companies to accelerate their efforts to align with the regulation. But, with the extension, there is a risk of complacency.
Moreover, loopholes in the regulation, such as the “low-risk” categorisation for certain countries, could undermine its effectiveness. Unscrupulous actors may exploit these loopholes, smuggling high-risk products into the EU through less scrutinised regions, thereby weakening the regulation’s intended impact.
What Should Companies Do with the Extra Time?
The success of the EUDR extension depends on how effectively businesses use the additional time. Companies should see this extension as an opportunity to build robust compliance frameworks and strengthen their commitment to sustainability. Here are key strategies:
Invest in Compliance Infrastructure
Traceability is at the heart of the EUDR, and its systems are the primary compliance drivers. But to achieve traceability, companies must invest in robust frameworks incorporating geospatial mapping, and advanced supply chain management systems.
Tailored data-sharing systems are also necessary to monitor supply chains effectively. These technologies ensure transparency, allowing businesses to verify that their products are sourced responsibly and meet EUDR requirements.
Engaging and Supporting Stakeholders:
The majority of the smallholder farmers who produce the EUDR-affected commodities are smallholders who lack adequate resources and knowledge for compliance. As such, it falls to companies to initiate training programs to educate farmers on sustainable practices.
Providing financial support is equally critical. Companies should provide monetary support to assist farmers in implementing necessary changes and foster a smoother transition to new agricultural practices.
Beyond the farmers, collaborations between players at the higher levels of the commodities value chains are also crucial. Big companies should work closely with local buying agents and brokers to create better frameworks for sustainability. These collaborations can extend from pooling resources to sharing knowledge and creating partnerships that will amplify the compliance efforts of all parties.
Pilot Sustainable Initiatives
The extension affords companies to scale their ongoing sustainability initiatives and take them further. So, in addition to addressing the primary EUDR concerns of mitigating deforestation and child labour, companies can begin implementing additional measures to guarantee perpetual compliance.
These measures can include initiatives like climate-smart farming, agroforestry, reforestation and other initiatives involving the farmers. These measures will help the farmers who are often the primary perpetrators of the EUDR offences to understand the environmental benefits of EUDR compliance.
Such initiatives will help to successfully integrate sustainability with productivity, ensuring farmers and producers are equipped for long-term alignment with EUDR and other upcoming regulations.
Moving Forward
The EU’s decision to extend the EUDR timeline reflects an understanding of the complexities involved in transforming global supply chains. However, this should not be seen as an excuse to delay action.
Companies should not take this extension as a time to relax. Instead, they should embrace it as an opportunity to achieve compliance while fostering more equitable supply chains. By acting with purpose and urgency, stakeholders can ensure that the EUDR achieves its goal.
