EUDR risk classifications omit governance & enforcement failures, critics say

SINGAPORE — The EU’s landmark anti-deforestation law is under fire for a risk classification system that critics say overlooks illegal logging and governance failures — potentially undermining the very goal of halting forest loss.

The EUDR’s benchmarking system, which affects the level of checks and requirements faced by exporters and EU importers alike, appears to focus overwhelmingly on deforestation metrics and existing EU political sanctions, according to an analysis by nonprofit Forest Trends.

At the same time, it overlooks equally critical issues like governance, corruption and law enforcement capacity, the analysis found.

Forest Trends warns that this narrow focus risks missing systemic governance failures and enforcement gaps — the very conditions that enable illegal deforestation to flourish, even when official forest loss appears low.

The risks are especially high as illegal deforestation is widespread in many tropical countries that export their goods to the EU, with estimates suggesting that 50-90% of deforestation in some tropical regions is illegal.

This approach may misclassify countries with weak enforcement and high illegality as low or standard risk. Many countries with well-documented governance failures, such as the Republic of Congo and Papua New Guinea, are classified as “low risk,” alongside Finland and Norway.

As part of its implementation, the EUDR uses a benchmarking system to classify countries based on their deforestation risk: low, standard or high. This classification determines the level of inspections and obligations placed on operators and member states’ authorities.

Forest Trends pointed out that the World Bank designates the Republic of Congo as a state with high fragility, and forest loss surged 150% in 2024, largely driven by illegal logging and unsustainable land use closely tied to governance and institutional breakdowns.

“These are not the signs of a low-risk sourcing environment,” Forest Trends wrote in its analysis.

Furthermore, countries known for reexporting commodities linked to deforestation like China, India and Singapore, are classified as low risk. This, despite their documented roles in transshipment processing and/or reexporting high-risk materials in ways that obscure original country of harvest.

Forest Trends warns that labeling countries with weak enforcement or roles in commodity laundering as “low risk” may offer a false sense of security, allowing illegal or unsustainable goods to bypass scrutiny.

“Even more striking is that Turkey and Kazakhstan, which the EC itself has flagged for laundering banned Russian-origin plywood, remain listed as low risk — a troubling disconnect,” Forest Trends wrote.

This raises concerns about potential loopholes that could allow deforestation-linked products to enter the EU market indirectly.

In contrast, only four countries appear in the “high risk” category, all of which are already under EU Council sanctions for unrelated reasons, raising concerns that this category was shaped more by diplomatic convenience than by actual deforestation risk, the analysis found.

“To be effective, enforcement and due diligence must be guided by a broader set of indicators—governance scores, conflict risk, corruption levels, and transshipment patterns,” Forest Trends wrote. “Because even if a country is rated low risk on deforestation, it doesn’t mean it’s low risk on legality. Due diligence and enforcement targeting must be guided by a fuller picture.”

Malaysia

These shortcomings in the benchmarking system have triggered growing unease among countries affected by the EUDR, including some that say their deforestation risk has been misrepresented.

Malaysia, one of the world’s top palm oil exporters, is among the countries questioning the EU’s decision to place it in the “standard risk” category. Officials in Kuala Lumpur argue that the classification ignores the country’s recent sustainability progress and penalizes efforts to reduce deforestation.

Speaking during an event in Singapore on May 28, Malaysia’s plantation and commodities minister, Johari Abdul Ghani, pointed out that the EU also needs to look at many other factors besides deforestation risk in assessing each country’s risk.

According to a European Commission staff working document accompanying the EUDR implementation rules, countries that fall into the “standard risk” category — particularly those near the lower end of that tier — may undergo further assessment based on qualitative criteria. These include factors such as forest governance capacity, human rights protections, transparency and climate commitments.

Each criterion is broken down into specific elements and scored on a scale from one to five. A country must achieve an average score of at least three out of five across all four qualitative criteria in order to qualify for reclassification into a lower risk category.

Besides calling for the EU to also consider factors such as forest governance and climate commitments, Johari also said the EU used outdated 2020 data from the United Nations Food and Agriculture Organization (FAO) for the classification, which might not reflect the country’s recent sustainability progress.

“So what we have done for the last five years is completely taking Malaysia into a different journey altogether,” he said at the Singapore Dialogue on Sustainable World Resources organized by the Singapore Institute of International Affairs.

The Malaysian Palm Oil Board said the EU’s classification was based on average annual forest loss between 2015 and 2020, which is “too narrow and incomplete”.

“This short timeframe does not show the full picture,” it said in a statement.

Malaysia’s deforestation rate has declined in recent years, according to independent satellite monitoring.

The 2024 data from the University of Maryland’s Global Land Analysis and Discovery lab, available on WRI’s Global Forest Watch platform, shows that Malaysia experienced a 13% reduction in primary forest loss compared with 2023, dropping out of the top 10 list for the first time.

Malaysia wants this progress reflected in the EUDR’s classification.

“We are fully committed to working with the EU Commission to ensure fair recognition of our progress,” Johari said.

While Johari didn’t explicitly announce a plan to ask for clarification, the Malaysian Palm Oil Council (MPOC), a nonprofit industry council overseen by the Ministry of Plantation and Commodities, has said that it would seek clarification from the European Commission on the benchmarking methodology used in its assessment.

“This will be our top priority,” MPOC chief executive officer Belvinder Sron told Bernama, the Malaysian National News Agency. “The ‘standard risk’ status for Malaysia does not recognise at all the progress and achievements made by the Malaysian palm oil industry in reducing deforestation and producing sustainable palm oil for European consumers.”

Benchmark

Set to take effect at the end of this year, the EUDR will ban imports of seven forest-linked commodities — soy, palm oil, coffee, cocoa, timber, rubber and beef — unless they can be proven to be deforestation-free and legally produced.

The ultimate goal of the EUDR is to tackle tropical deforestation and associated greenhouse gas emissions.

While all countries can still export to the EU if they meet the regulation’s requirements, those classified as standard or high risk must comply with stricter due diligence, adding costs and potential delays.

Only four countries — Belarus, Myanmar, North Korea and Russia — got the high-risk classification for fuelling deforestation.

Low-risk countries, meanwhile, benefit from simplified due diligence, such as not having to conduct a risk assessment or adopt risk mitigation procedures and measures. They consist of 140 countries, including all 27 EU countries, the United States, China, Australia and Canada.

MPOC chairman Carl Bek-Nielsen called the EU’s decision to categorize all of its member states as low risk a form of “favouritism.”

“The EC knows that we have a far better record on this than some European states,” he told Bernama. “And yet they have rewarded its own members with ‘low risk’ status. This apparent favouritism will inevitably cause resentment instead of building bridges for closer cooperation.”

The rest are in the standard category, where full due diligence applies, including geolocation, traceability and risk mitigation. Countries in the standard category include major exporters of many of the affected products like Indonesia, Malaysia and Brazil.

Indonesia and Malaysia are two of the world’s top palm oil producing and exporting countries, while Brazil is a major beef and soy exporter.

It’s unclear whether Indonesia will follow Malaysia’s footsteps in seeking clarification from the EU.

Agam Fatchurrochman, the head of sustainability communication at Indonesia’s main palm oil business association, GAPKI, told Mongabay on the sidelines of the event in Singapore, “We agree with Malaysia that the classification decision is politically motivated. But we leave it to the government to respond.”

The European Commission has indicated that the benchmarking process is dynamic and subject to review, with the first comprehensive reassessment scheduled for 2026.

EU officials have sought to downplay the impact of the benchmarking system.

Sander Happaerts, the green and digital counselor at the EU delegation to Indonesia, said the main purpose of benchmarking is to guide competent authorities on the percentage of imports they need to inspect, while the core compliance requirements remain the same for all operators.

“Nor will any products be banned from high-risk countries. So that’s not the case at all,” he said in March 2025.

Happaerts added that the benchmarking is also intended to help allocate EU support and resources toward countries that have higher levels of risks.

“This is a really important point because sometimes we forget that the ultimate aim of the EUDR is to halt deforestation,” he said.

Call for stronger standard

While countries like Malaysia might seek for low-risk status to enjoy greater access to European markets, activists warn that granting such status to producer countries might leave the back door wide open to goods that have been produced on recently deforested or degraded land and/or grown illegally in protected areas such as wildlife refuges, national forests and Indigenous territories.

Critics also pointed out that sustainability measures taken by countries like Malaysia, such as certification schemes and stricter forest policies, often overlook the broader environmental and human rights costs of commodity production.

Luciana Téllez Chávez, a senior researcher at Human Rights Watch, pointed out that while Malaysia’s deforestation rate has declined, the human rights risks associated with the production of commodities in the country remain extremely high.

“Indigenous peoples’ territories are still being logged and encroached upon without their consent,” she said, pointing out that these ongoing abuses undermine the kind of human rights safeguards the EUDR is meant to uphold.

One example is the case of the Indigenous communities of Penan and Kenyah in the Upper Belaga River in Sarawak, whose ancestral forests had allegedly been cleared by palm oil company Urun Plantations Sdn. Bhd. without their free, prior and informed consent (FPIC).

While some village leaders have expressed support, community members report that a majority of residents from nine out of 15 villages in the area firmly oppose the recent rapid expansion.

Therefore, the Indigenous communities recently lodged a formal complaint against the company at the MSPO.

“Our forest is our life, and they are taking it without our permission,” said Veronica Bungan Ta, a representative from the affected community.

U.S.-based campaign group Mighty Earth also questioned the EUDR’s benchmarking result, especially those in the low-risk category.

Mighty Earth policy director Julian Oram pointed out that some countries such as Canada, Ghana, Papua New Guinea and Romania shouldn’t be classified as low-risk given the evidence of deforestation and forest degradation, calling the decision “nonsensical” in light of recent forest degradation reports.

It “seemingly wilfully belies recent evidence of deforestation, forest degradation and illegality linked to commodities originating from those countries being sold on the EU market,” he said.

NGO Rainforest Foundation Norway, meanwhile, criticized the EU’s decision to classify some top deforesting countries like Brazil, Indonesia and DR Congo as standard risk.

According to the FAO, Brazil, Indonesia and the DR Congo are the three countries in the world that have lost the most forests since 1990.

“The EUDR’s potential to protect vast areas of tropical rainforest is now being reduced by a meaningless application of risk benchmarking. It is simply unbelievable that Brazil, Indonesia, and DR Congo, responsible for over 80% of net global deforestation, are not rated as high-risk,” said Toerris Jaeger, executive director of Rainforest Foundation Norway.

Placing these in the standard category will reduce the annual checks of their exports by EU member states by at least two-thirds, creating incentives to evade controls as only 3% of importers to the EU will now be checked every year, he added.

“For the rainforest’s survival, an uncompromising law is essential,” Jaeger said. “We strongly urge the EU institutions to revise the benchmarking methodology already next year, to enable the EUDR to live up to its potential.”

Banner image: The EU Deforestation Regulation (EUDR) aims to ensure that forest-related products that are sold in the EU market are deforestation-free. Image by Rhett Butler/Mongabay.

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