In a two-part series, Sonal Desai, News Editor at esgnews.earth, analyzes the implications of the EU’s rejection of the country risk system within its Deforestation Regulation (EUDR), and the challenging path it poses for global forest protection.
The recent decision by EU lawmakers to reject the country risk system within the EU Deforestation Regulation (EUDR) signals a broader challenge in combating global forest loss.
The EU Deforestation Regulation (EUDR) application for large/medium companies is extended to December 30, 2025, with small businesses by June 30, 2026. This aims to save 8 million+ hectares of forest and prevent 2.169 billion tonnes of CO2 emissions over its first decade.
However, the EU lawmakers rejected the Commission’s May 2025 country risk classification system, citing outdated data and insufficient categories, delaying crucial due diligence simplifications.
The recent setback for the EU Deforestation Regulation (EUDR) highlights a more pervasive issue: the relentless destruction of forests. This destruction is driven by rapid urbanization and development in key regions, often facilitated by governance shortcomings and resulting in profound social and environmental consequences.
This decision highlights a significant hurdle in the global effort to combat deforestation.
Addressing this planetary crisis demands a comprehensive, multi-faceted approach that extends beyond trade regulations.
The planetary scale of forest loss:
Deforestation is a critical global emergency, threatening climate stability, biodiversity, and human well-being. Forests are vital carbon sinks, absorbing vast amounts of atmospheric carbon dioxide. Their destruction releases this stored carbon, with deforestation and forest degradation contributing an estimated 10-12% of global greenhouse gas emissions (FAO).
Tropical primary forest loss surged to 6.7 million hectares, nearly double 2023 levels, equivalent to 18 soccer fields lost every minute. Associated fires alone emitted 4.1 gigatons of greenhouse gas emissions, more than four times the emissions from all air travel in 2023.
Add to that exacerbated natural calamities. This loss directly contributes to more natural disasters. Without forests, soil erosion accelerates. This makes land more vulnerable to landslides; for example, in India’s Western Ghats, slopes over 15° become highly susceptible without woody vegetation. Floods also increase; globally, a 10% decrease in natural forest cover can raise flood frequency by 4-28%. Altered rainfall patterns, with less absorption and more runoff, can trigger intense droughts. This fuels a vicious cycle of forest fires, which accounted for nearly half of tropical primary forest loss in 2024—a first in two decades.
India too at the crossroads:
India, in its pursuit of rapid economic growth, faces significant forest loss driven by urban expansion, infrastructure projects, and agriculture.
For example, between 2001-2024, India has lost 2.31 million hectares of tree cover, resulting in 1.29 gigatonnes of CO2 equivalent emissions. While some tree cover gain is noted, the destruction of ecologically vital primary humid forests is particularly concerning. Settlements and infrastructure development alone accounted for 30,600 hectares of tree cover loss during this period.
Regional Impacts and Urban Heat Islands
Indian cities are warming nearly twice as fast as rural areas, a trend worsened by urbanization and local deforestation. A May 2024 Nature study revealed Indian cities are warming 0.53°C per decade, with urbanization directly contributing 0.2°C. This leads to more frequent and intense heatwaves, like those exceeding 44°C for extended periods in 2024 across the Deccan Plateau and Gangetic plains, alongside erratic monsoon patterns. Urbanization also increases rainfall intensity and alters wind patterns in specific urban areas.
Governance and Developer Nexus: A recurring critique points to perceived complicity between government and developers. The Assam Solar Power Project exemplifies this: a proposed 2,400-hectare development threatened to displace over 20,000 Karbi, Naga, and Adivasi families from their ancestral lands. Although the Asian Development Bank (ADB) recently cancelled its loan due to community protests, the case highlights how development priorities can override indigenous rights and environmental safeguards.
The Amazon: A Critical Global Lung Under Pressure
The Amazon rainforest, indispensable for global climate regulation, continues to face severe threats.
Brazilian Amazon (2024): While deforestation in the Brazilian Amazon saw a 7% drop (to 3,739 km²) compared to 2023, forest degradation skyrocketed by 497% (to 36,379 km²). This surge is largely attributed to fires, often linked to extreme drought and agricultural expansion for soy and cattle ranching.
Five Urgent Areas for Attention and Action:
The global economy could lose up to $2.7 trillion annually due to the loss of ecosystem services (WWF estimate), vastly outweighing short-term economic gains from destructive development. Here are five areas that need urgent attention.
- Strengthening governance and enforcement:
- Implement clear, accountable environmental laws.
- Transparent land diversion processes.
- Strict penalties for illegal deforestation.
- Dismantle corruption in land acquisition and clearance mechanisms.
- 91% of Brazilian Amazon forest loss linked to illegal activity.
- Urgent need for stringent enforcement and anti-corruption measures.
- Prioritizing community rights and participation:
- Secure and recognize indigenous and local communities’ land and resource rights.
- Ensure Free, Prior, and Informed Consent (FPIC) for development projects.
- Indigenous lands in Amazon show 50% lower deforestation rates.
- Globally, indigenous communities manage 36% of intact forests.
- Implementing FPIC ensures projects respect these rights and are sustainable.
- Promoting sustainable land use and economic alternatives:
- Invest in sustainable agricultural practices and agroforestry.
- Agroforestry systems in Brazil increase farmers’ income by up to 40%.
- NTFPs like wild honey support local economies while maintaining forests.
- Incentivize green technologies
- Decentralize renewable energy solutions that minimize land footprint.
- Enhancing monitoring and data transparency:
- Real time forest tracking utilizes advanced satellite technology and ground-level monitoring.
- Data publicly accessible for accountability and policy decision-making.
- Global Forest Watch provides weekly GLAD deforestation alerts.
- New radar-based alerts enhance monitoring through cloud cover.
- Revisiting development paradigms:
- Integrate environmental and social sustainability in development models.
- Conduct independent impact assessments to weigh long-term costs against short-term benefits.
- Studies show environmental degradation can reduce economic growth by -0.455% in the medium term.
- Projects like India’s Ken-Betwa River Linking Project spark debates on development-conservation balance.
Our take: Forests are central to Environmental, Social, and Governance (ESG) frameworks. Environmentally, they are vital for climate mitigation (carbon sinks), biodiversity, and healthy ecosystems. Socially, they support Indigenous communities’ livelihoods, culture, and identity. Governance-wise, the EUDR requires companies to prove their products are deforestation-free, impacting ESG reporting and due diligence.
This necessitates active forest restoration and sustainable management, integrating forests into ESG KPIs. Ignoring deforestation’s devastation is no longer viable.
To be continued in Part 2 …
