EU deforestation law faces enforcement test as palm oil giants risk violations

Some of the world's biggest consumer goods companies risk breaching the European Union's deforestation law through palm oil sourced from Indonesian plantations accused of illegal activities, according to investigations by Indonesian environmental organisations and government authorities.

The findings come as the EU's anti-deforestation rules are due to take force on 30 December 2026, following repeated delays and political pressure from EU governments and industry seeking to soften or delay the law.

The bloc's anti-deforestation law requires suppliers of cocoa, coffee, soy, palm oil, wood, rubber and beef to prove their goods are not linked to deforestation in exchange for access to the EU market.

The law has faced repeated political setbacks, with its implementation delayed amid concerns about administrative costs, traceability requirements and the burden on businesses and trading partners.Several countries producing such goods, like Brazil, Indonesia, Malaysia, Colombia, Ghana, and the United States, have also lobbied Brussels to reconsider the law.US Ambassador to the EU Andrew Puzder has strongly criticised the bloc's law, labelling it as over-regulation, selective protectionism and an unnecessary non-tariff trade barrier.Now the Indonesian investigation raises questions about whether the EU will enforce its environmental rules as planned, despite growing pressure to ease regulatory burdens on companies.Environmental groups WALHI Kalteng, TuK Indonesia and Sawit Watch traced links between plantations in Indonesia's Central Kalimantan province and major international consumer brands.Companies identified as recent buyers of palm oil from the plantation include PepsiCo, Unilever, Ferrero, Mondelez and Procter & Gamble, among others.Their investigation identified signs of deforestation in 2024 at the palm oil plantation PT Karya Makmur Abadi, a subsidiary of the KLK Group, a rubber company, despite the law's cut-off date of 31 December 2020.Under EU rules, if a forest was cut down after that date, products like coffee, beef, wood, or palm oil are completely banned from the EU market.But the Indonesian findings indicate a risk that palm oil from land cleared after the cut-off date could enter the EU market.

However, they didn't establish that every named company has violated the law.Indonesia has been losing its forests at one of the fastest rates in the world because of illegal logging, mining, new oil palm plantations and slash-and-burn land clearing.Devastating wildfires sweeping across Indonesia have also been linked to decades of deforestation and forest degradation. Environmental activists warned that clearing forests to make way for agricultural production, including oil palm plantations, leaves landscapes more vulnerable to fires.Achmad Surambo, executive director of the NGO Sawit Watch, said Europe’s largest palm oil buyers have failed to self-police their involvement in deforestation and environmental destruction."Indonesian communities want immediate and strong enforcement of European supply chain sustainability regulations,” said Surambo.Perrine Fournier, a trade and forest campaigner at global NGO Fern, said the Indonesian's findings reveal the country's palm oil industry "remains tainted by illegality," emboldened by the fact that major international corporations and European consumers are enmeshed in it.

"The investigation underlines why the EUDR (EU's anti-deforestation law) can be a crucial tool in halting the biggest cause of deforestation on earth: clearing land for agricultural commodities such as palm oil, as well as the pivotal role that NGOs can play in ensuring its success," said Fournier."It’s now incumbent on the Competent Authorities responsible for enforcing the EUDR (EU's anti-deforestation law) to act on these findings.”

The looming December date will be a litmus test for Brussels to prove it can pivot from negotiating environmental ambitions to actually enforcing them.