EU rules are complex and time-consuming

The EU is in the news for all the wrong reasons, and not just because of the bloc’s new tariff deal with Donald Trump.

Italian coffee giant Lavazza, a company that has built its reputation on quality and sustainability, has called for yet another delay to the EU’s deforestation regulations (EUDR), It isn’t alone: Mondelez International, the maker of Cadbury, Oreo and Milka brands, has also joined the chorus, demanding a 12-month delay to have time to prepare for bureaucratic accreditation that is both complex and time consuming.

It matters to us in the UK because Keir Starmer is realigning us with EU rules without so much as the House of Commons European Scrutiny Committee considering if they are a good thing or not (he abolished the committee).

These latest examples of repeated corporate pushback against the EU’s new laws aren’t just about compliance costs or bureaucratic burdens, they’re about revealing a pernicious and fundamentally flawed system that protects European vested interests by granting competitive advantage over international partners through the use of outdated data and questionable methodology.

It matters not that Lavazza has its headquarters inside the EU (Italy) and Nestlé’s is outside (Switzerland), or that the processing plants of both are spread across the European Union, the issue is about the sourcing of raw materials and how the EU dishes out classifications to give preference. 

While the regulation requiring companies to prove their supply chains don’t contribute to deforestation might seem reasonable on paper, its implementation follows a troubling pattern. European member states can automatically receive ‘low risk’ classifications, while external suppliers face costly and burdensome compliance requirements based on outdated and methodologically flawed data.

The corporate revolt gains steam

Both Lavazza’s and Mondelez’s renewed calls for EUDR delay reflect a growing protest from major manufacturers who initially supported the EUDR’s environmental goals. Mondelez has specifically highlighted that in Côte d’Ivoire, a major cocoa supplier to the EU, more than one million farmers produce cocoa but fewer than a fifth have so far obtained the EUDR-mandated traceability ID cards, which must be renewed by the end of the year. 

‘Without more time to build systems on the ground, compliant cocoa risks being shut out of the EU – harming farmers, increasing costs for businesses, and disrupting supply chains,’ warns Mondelez vice president, Massimiliano di Domenico.

In contrast chocolate producers Nestlé, Ferrero and Tony’s Chocolonely, have called on the European Commission to ensure ‘the full preservation and swift, ambitious implementation’ of the EUDR. 

This split reveals the regulation’s real-world impact; suggesting that some large corporations may be supporting EUDR strategically because they possess significant advantages in weathering the compliance burden compared to smaller competitors.

While the absolute compliance costs for large corporations are higher, they are significantly lower as a percentage of revenue – averaging just 0.06%, compared to 0.17% for SMEs. When compliance expense is spread across much larger revenue bases, regulation soon becomes a competitive moat against smaller rivals.

It is not the first time the EU has created regulations that sound virtuous in Brussels but prove discriminatory and scientifically dubious in practice. Aluminium smelting? Sandeel fishing anyone?

A rigged classification system

The most damning indictment of EUDR comes from comparing actual deforestation rates with the EU’s risk classifications. Take Malaysia, classified as ‘medium risk’ despite having a far better record than some European states.

Sweden, classified by the EU as ‘low risk’ has the most ‘old growth’ forests in Europe, covering 70% of its landmass, but it is tearing them down faster than the Amazon. Sweden lost 0.87% of its remaining primary forest last year, while Malaysia lost just 0.56% of its primary forest. 

This isn’t just statistical noise, it’s systematic bias embedded in flawed methodology. The EU’s classification relies on ‘total forest cover’ data rather than distinguishing between irreplaceable primary forests and managed secondary growth. This allows EU member states that have replaced ancient forests with monoculture plantations to maintain their privileged status while penalising countries that preserve significant tracts of primary forest.

While Malaysia has made dramatic progress in curbing deforestation – reducing primary forest loss by 57% between 2015-2017 and 2020-2022, with a further 13% decline in 2024 – the EUDR classifications ignore this improvement entirely. According to Global Forest Watch data, Malaysia has fallen out of the top 10 countries for tropical primary forest loss for the first time, a remarkable achievement that the EU’s 2020 benchmarking system fails to capture.

The truth is you cannot save ancient forests with ancient data but the EU’s benchmarking system seeks to do exactly that, using out-of-date information and inappropriate satellite data to make decisions about rapidly changing environments.

To work, the scheme needs to be based on up-to-date satellite information on primary forests, not outdated ‘total forest cover’ metrics that allows countries to replace ancient forests with monocultures while claiming they’re not deforesting.

This isn’t a theoretical concern, it’s the predictable outcome of creating arbitrary trade barriers disguised as environmental protection. When regulations discriminate between identical products based solely on country of origin rather than actual environmental impact, they cease to be about conservation and become about protectionism.

A better path forward

When companies like Lavazza push back against EUDR, they’re not opposing environmental protection, they’re opposing the EU rigging the market. 

The tragedy is that effective solutions exist. The European Forest Institute’s gap analysis of Malaysian Sustainable Palm Oil (MSPO) certification showed how national schemes can achieve EUDR’s core objectives of no deforestation and legality of production more effectively than Brussels’ one-size-fits-all approach. 

The regulation’s current trajectory threatens to create trade barriers that punish environmental role models while protecting EU vested interests, all while failing to achieve meaningful conservation outcomes. 

The EU has a choice: it can continue down a path that privileges European producers who are free to ravage their own environment while imposing arbitrary burdens on international suppliers – or it can embrace science-based, non-discriminatory approaches that actually protect forests. The UK should not go anywhere near adopting EUDR.

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