Deforestation Delay: EU Mulls Another Year’s Postponement of EUDR

26 September 2025

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The European Commission is poised to delay the long-awaited European Union Regulation on deforestation-free products (EUDR) by another year citing IT system issues.

What you should know

• Second delay likely: EU may push back EUDR entry into force from Dec 2025 to Dec 2026.
• Investor risk: Delay prolongs exposure to deforestation-linked supply chains risks
• Credibility gap: Commission blamed for weak political will and deregulation drift.
• Excuse or strategy? IT capacity cited, but critics see political backsliding.

Deforestation is a core ESG risk with direct implications for biodiversity, carbon emissions, and legal liabilities. For institutional investors, the European Commission’s move to postpone the EU Deforestation Regulation (EUDR) by another year adds both financial and reputational risk. Companies that invested in compliance systems now face uncertainty and stranded costs, while portfolios remain exposed to commodities linked to deforestation.

A letter sent by European Commissioner for Environment, Water Resilience and a Competitive Circular Economy, Jessika Roswall stated the Commission is currently considering a postponement of one year of the EUDR’s entry into application “in order to avoid uncertainty for authorities and operational difficulties for stakeholders in the EU and third countries, and to allow time to remedy the identified risks”. The EUDR is currently due to come into effect on 30 December 2025.

According to the document, the EUDR’s implementation requires an IT system that is “able to handle all the transactions for products covered by the EUDR and initiated by economic operators in the scope of the EUDR, both upstream and downstream, inside and outside the EU”. However, Roswall wrote in the letter that “new projections on the number of expected operations and interactions between economic operators and the IT system has led to a substantial upward reassessment of the projected load on the IT system”.

She added that despite efforts to address the issues in time for the entry into application of the EUDR, “it is not possible to have sufficient guarantees that the IT system will be able to sustain the level of the expected load”.

The EUDR, when (or if, as it seemingly appears) implemented, would ban companies operating in the EU from trading commodities associated with deforestation and forest degradation. These commodities would include products such as beef, cocoa, coffee, palm oil, rubber, soy and wood, as well as some products derived from these commodities such as chocolate, leather and tires. The law would initially apply to large and medium companies requiring them to verify and prove their products are deforestation free, later being expanded to also encompass smaller businesses.

In December, EU member states and the European Parliament opted to delay the application of the EUDR, pushing back the date of the regulation coming into effect from 30 December 2024 until 30 December 2025. At the time, there were also major concerns from some quarters that the EUDR would be watered down by the lawmakers. However, these concerns did not come to fruition, with the legal text left intact.

Based on the initial timeline for the EUDR, if stuck to the law would come into effect for large companies from 30 December 2026 and 30 June 2027 for micro- and small enterprises.

However, the delay has again aggravated concerns about the law being weakened and the damage that could be done in leaving companies largely unchecked for a further year, especially given the direction of travel on sustainability-related issues this year.

“It is probably no coincidence that this move comes right as the Commission pursues an unprecedented deregulation agenda, throwing the EUDR under the bus,” said Anke Schulmeister-Oldenhove, Forest Policy Manager at the WWF European Policy Office (EU). “This is unacceptable and a massive embarrassment for President Von der Leyen and her Commission. If this technical issue is real, this shows not only incompetence, but also a clear lack of political will to invest sufficiently in a timely implementation of the EUDR.”

In a statement, WWF EU pointed out that the potential postponement arrives just two weeks after almost 200,000 people urged the Commission to stop any rollback of EU nature laws under the guise of ‘simplification’, including the EUDR.

WWF EU warned that there is a “real danger” of a delay to the EUDR opening the door to a “further weakening of the law with devastating consequences for forests worldwide”. The organisation added that the EUDR has “been targeted by conservative and far-right political groups at the European Parliament, along with several national governments, pressuring the European Commission to “simplify” the EUDR, arguing that the current agreed rules “too difficult” to meet.”

The organisation lambasted the decision as “surprising and embarrassing” given the commission has had two years of preparation time for the IT system, adding that the delay would “lead to massive stranded costs for all those companies already invested in compliance”. 

Andreas Rasche, Professor at Copenhagen Business School, noted that the EUDR was adopted around three years ago and has already been postponed once. “Either the European Commission is really not good at building the relevant IT systems (which they knew about for a long time), or this is just a pretext and something else is going on,” he stated.

Forestry is a valuable industry and encompasses several important commodities. This means that institutional investors, including pension funds and sovereign wealth funds, are invested in sustainable forestry, but must be carefully to navigate potential deforestation risks that could arise. In late 2023, Minerva Analytics reported that banks had invested U$307 billion into high-risk forestry and agriculture companies linked to tropical deforestation since the Paris Agreement was signed according to research by the Forests & Finance Coalition.

Institutional investors that have committed finance to sustainable forestry-related activities include UK pension provider Nest, Canada’s British Columbia Investment Management, the Dutch pension provider APG and New Zealand’s sovereign wealth fund.

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Last Updated: 26 September 2025