EU Parliament Rejection of Country Risk Classification Benchmarking Framework Sparks Global Uncertainty for Businesses Navigating EUDR Compliance

Editor’s note: This article explores the implications of the European Parliament’s rejection of the EUDR country-risk benchmarking framework and what it means for global supply chains. Featuring insights from KOLTIVA’s Senior Manager for Agriculture and Environment, Andre Mawardhi, it highlights the urgent need for science-based reform and inclusive compliance systems. As enforcement deadlines draw near, the call for data accuracy, regional nuance, and smallholder inclusion has never been more critical. 

The European Parliament’s rejection of the EU Commission’s proposed country-risk benchmarking system under the Deforestation Regulation (EUDR) marks a pivotal moment for global supply chains. On July 9, 2025, the Parliament voted 373 to 289 against the framework—sending a strong signal with far-reaching implications for regulators, importers, NGOs, and sustainability-driven businesses.

The benchmarking framework was intended to classify countries as low, standard, or high risk for deforestation. These classifications would have shaped the level of due diligence required for EU importers of seven key commodities: cocoa, coffee, palm oil, soy, wood, rubber, and cattle. 

Critics raised serious concerns about the system’s credibility. They argued that it relied on outdated data and failed to account for current realities on the ground, including legality issues as well as ongoing deforestation and forest degradation. As ESG Today reported, the proposed model risked unfairly labeling countries as high-risk despite recent sustainability progress. 

With the December 2025 enforcement deadline approaching, the rejection leaves exporters, importers, and smallholder networks facing renewed uncertainty—even as many have made significant efforts to build traceable and deforestation-free supply chains. 

In response, KOLTIVA, a global leader in sustainable sourcing solutions, is advocating for a reformed, science-based approach grounded in data accuracy, supply chain transparency, and inclusive support for smallholders. 

The urgency is undeniable. Forests are vital to tackling the interconnected crises of climate change, biodiversity loss, and ecosystem degradation. Yet in 2023 alone, the world lost nearly 16 million acres of forest—an area larger than West Virginia—according to the 2024 Forest Declaration Assessment (WWF, 2024). Agriculture accounts for more than 49% of tropical deforestation, while mining, logging, and infrastructure expansion continue to intensify the threat (World Resources Institute) The Forest Declaration Assessment further warns that deforestation levels remain nearly 50% above the reduction path required to meet global 2030 targets. 

As EUDR compliance efforts continue, the need for credible, up-to-date country risk classification systems—and for collaborative, data-driven solutions—has never been more urgent. 

What the Parliament Rejected EUDR Country Risk Classification—and Why It Matters 

Originally, The European Commission’s proposed country-risk benchmarking system under the EU Deforestation Regulation (EUDR) aimed to categorize all countries as “low,” “standard,” or “high risk” for deforestation. This classification would determine the level of due diligence required by EU importers of key commodities like palm oil, cocoa, and soy.

On July 9, 2025, the European Parliament voted 373 to 289 to reject the proposal, citing the following key concerns: 

• Outdated data sources: The framework relied on historical land-use statistics that do not reflect recent efforts or current realities. Critics, particularly from the European People’s Party (EPP), called for science-based, real-time assessments rather than static classifications (ESG Today, 2025).
• Risk tiers lack credibility: The inclusion of only three risk categories – low, standard, and high risk – by the EUDR was “insufficient to adequately differentiate between countries with vastly different levels of deforestation risk (ESG Today, 2025)
• Misleading classifications of key countries: Despite ongoing deforestation, countries like Brazil, Indonesia, and the Democratic Republic of the Congo (DRC) were labeled only as “standard risk.” Meanwhile, only Belarus, Russia, Myanmar, and North Korea were listed as “high risk.” These rankings raised credibility issues, as highlighted by Politico Europe (Politico.eu, 2025). 

Although the vote is non-binding, it sends a strong political signal. It urges the European Commission to revise the benchmarking approach to better reflect local conditions, promote data accuracy, and rebuild trust across global trade systems 

A Global Ripple Effect: Compliance Uncertainty 

While the EUDR’s first enforcement deadline approaches—December 30, 2025 for large companies and June 2026 for SMEs—businesses across the supply chain face fresh uncertainty. This timely feature includes insights from our Senior Manager Agriculture & Environment,  Andre Mawardhi, ahead of the EUDR enforcement deadline in December 2025. 

Andre said, “One of the most critical oversights in the initial proposal was the absence of legality indicators. Under the EUDR, products must be both deforestation-free and legally compliant. If the European Commission proposes a new version, it will likely be more stringent. This decision acknowledges the growing concern across supply chains that risk classifications must be based on current data and clear, evidence-based distinctions. At KOLTIVA, we see potential reforms as an opportunity to strengthen the EUDR’s credibility and better support sustainable sourcing efforts.” 

 He added, “This issue goes beyond regulatory definitions. An inaccurate classification system risks unintentionally penalizing compliant businesses. A more refined, data-driven model is essential to safeguard responsible supply chains and ensure the regulation meets its intended objectives.” 

Andre further emphasized, “Ultimately, this discussion is not only about technical risk categories....(read more)

Read more on KOLTIVA's website: https://www.koltiva.com/post/eu-parliament-rejects-eudr-country-risk-classification-global-uncertainty