Source: Daily Motion. Oranghutan Fighting Deforestation: Will You?
The EU postponed its EUDR policies for one year, to December 30, 2025, and eight new dilutive amendments have been proposed to weaken the necessary legislation. The EUDR requires companies importing key commodities – including timber, coffee, packaging, and rubber – to demonstrate that their supply chains are free from illegal, illicit, and at times legal deforestation or ecosystem degradation.
Businesses and farmers support the EUDR. Nestlé, Mars, and others are publicly advocating for the EDR regulations, requesting that the EU increase support for businesses working to decrease climate change impacts in their supply chains. Smallholder farmers – despite political claims that the EUDR hurts their interests – are pushing for passage of a strong EUDR set of rules.
Why It Matters
In 2023, 6.4 million hectares of forests were lost, alongside ongoing temperate, boreal and tropical forest degradation.
Global wildlife populations have already declined by an average of 73%.
In fact, more than 700,000 cocoa farmers in Ghana and Côte d'Ivoire support the EUDR.
Details
When companies do not report accurately their forest supply chain, they lose money. Four examples show why zero deforestation and degradation in supply chains save money.
The U.S. flooring company, Lumber Liquidators, lied about the sourcing of its supply chain in 2013 resulting in US Government fines of $13.2 million and the resignation of their CEO. Their market capitalization during their period afterwards given their subsequent formaldehyde scandal declined 90% losing investors almost $3 billion.
In 2016, IOI Corporation was suspended from the Roundtable on Sustainable Palm Oil (RSPO) because of 11,750 hectares of land cleared illegally by its Indonesian subsidiaries. With the suspension, RSPO prohibited IOI from selling crude sustainable palm oil (CSPO). This prompted 27 of IOI's largest corporate buyers to suspend procurement contracts with the company, leading to a drop in its net income. IOI never recovered from their illegal deforestation eventually restructuring and selling off key divisions.
United Cacao's illegal deforestation was a leading indicator of the broader corporate governance issues, culminating in its bankruptcy in July 2017. Its illegal deforestation expansion plans conflicted directly with government regulations against deforestation - a risk the company itself identified in its bond issuance. On February 6, 2017, United Cacao was delisted from the London Stock Exchange AIM, with equity investors losing more than $42 million dollars.
JBS is the world’s largest meat company by revenues, capacity, and production including beef, poultry, lamb and pork. It is the largest beef exporter from Brazil. Its IPO of its international division in 2017 was cancelled due deforestation risks and other risks.
Zero deforestation and degradation supply chains are not just good business, they are smart business.
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