The European Commission is preparing to postpone the implementation of its landmark deforestation regulation by another year, citing concerns that current IT systems cannot handle the scale of data required under the law. The decision would push back enforcement timelines for one of the EU’s flagship sustainability measures, designed to prevent products linked to deforestation from entering or leaving European markets.

Scope and Strategic Framework

Originally proposed in 2021, the EU Deforestation Regulation (EUDR) seeks to block commodities such as palm oil, beef, soy, timber, cocoa, coffee, and rubber along with derived products like leather, chocolate, tires, and furniture from being sourced from land deforested after 2020. The law introduces strict due diligence requirements, obligating companies to trace products to the specific plot of land where they were produced and to verify compliance with environmental and legal standards in the country of origin.

Large companies were initially expected to comply by the end of 2024, with small and microenterprises given until mid-2026. Lawmakers had already agreed to a one-year delay last year after both EU stakeholders and trading partners raised concerns about their level of preparedness.

Economic and Environmental Impact

The regulation is seen as a central tool in the EU’s Green Deal strategy, linking trade policy with climate and biodiversity objectives. With more than half of global deforestation tied to agricultural expansion, the EUDR is expected to reshape supply chains and influence sourcing practices worldwide.

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A delay, however, raises questions about the EU’s ability to enforce its own sustainability agenda at a time when deforestation continues to accelerate in parts of the Amazon, Southeast Asia, and Africa. For producers in exporting countries, the uncertainty creates challenges in planning compliance investments, while European companies face reputational risks if they are perceived to be benefitting from extended timelines.

Governance and Transparency

The latest proposed delay was outlined in a letter from EU Commissioner Jessika Roswall to Antonio Decaro, Chair of the Parliament’s ENVI Committee. Roswall explained that system stress tests revealed a much higher-than-expected load on the IT infrastructure designed to manage transactions under the regulation. Without upgrades, she warned, the system risked slowing to “unacceptable levels” or suffering repeated breakdowns, potentially disrupting trade flows and undermining the law’s credibility.

Earlier this year, implementation was further complicated when Members of Parliament voted against the benchmarking system that would have categorized countries by deforestation risk. Some lawmakers argued for a “no risk” designation that would exempt certain nations altogether, a move that critics say could weaken the regulation’s effectiveness.

Challenges to Scaling

Rolling out the EUDR highlights the tension between regulatory ambition and practical readiness. Global trading partners have argued that they need more time and resources to adjust traceability systems and certification processes. Within the EU, preparation has also been uneven, with smaller companies in particular struggling to adapt to complex requirements. The IT challenges now identified by the Commission expose another bottleneck, showing that technological infrastructure is as critical as political will in delivering large-scale sustainability rules.

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Future Outlook

The Commission has emphasized that the EUDR remains a cornerstone of Europe’s climate and biodiversity agenda. A one-year delay is being presented as a pragmatic measure to ensure smoother implementation rather than a retreat from its objectives. However, repeated postponements risk undermining confidence in the EU’s ability to lead on global environmental governance.

For now, the question is whether the additional year will be sufficient to strengthen systems, build confidence among trading partners, and prepare businesses across the value chain. The outcome will signal whether the EU can balance its role as a global climate leader with the operational demands of regulating complex supply chains.

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