U.S. Companies Face EU Deforestation Rules on Coffee, Wood and Other Everyday Goods
Businesses are bracing for tough new regulations after voluntary corporate efforts failed
Businesses are bracing for tough new regulations after voluntary corporate efforts failed
Companies selling everyday products such as leather shoes, coffee and chocolate in the European Union will soon need to prove their wares aren’t causing forest loss under a new law, after voluntary efforts largely failed.
The world’s toughest rules on deforestation come into force Thursday, meaning that companies have 18 months to prepare for proving the origin of seven commodities imported into the EU that are known to drive forest loss: cattle, cocoa, coffee, palm oil, soy, rubber and wood.
Almost 40% of the world’s 500 largest companies using the seven commodities covered by the new EU rules haven’t set a policy on forest loss, environmental nonprofit Global Canopy said in a report in February. The nonprofit estimates at least 37 big U.S.-based companies, including Starbucks and Kellogg, will be covered by the new rules.
“Our team is reviewing the regulations and working with our materials and ingredients suppliers to prepare,” a Kellogg spokeswoman said. Starbucks declined to comment.

Businesses will need to pinpoint the plot of land where the product came from and prove no forests have been cleared on the site since 2020. They will need to provide evidence of due diligence, which will likely include satellite imagery. Planet Labs and Airbus-owned Starling—two businesses that use satellites to monitor land use—said U.S. companies have shown interest in their services because of the new regulations.
Importers failing to meet the new rules face fines of up to 4% of their annual revenue in the bloc. The law requires the bloc’s national authorities to check 9% of shipments coming from countries it considers to have a high risk of deforestation, 3% for nations it labels standard risk and 1% from low risk nations.
Companies are still waiting for the EU to provide a list of countries designated as high risk. Nations such as Brazil, Indonesia and Malaysia are lobbying against being classified as high risk, fearing the label will hurt trade.
Loss of tropical primary, or mature, forests globally totalled 4.1 million hectares in 2022, the equivalent of losing 11 soccer fields of forest a minute, according to the World Resources Institute.

Many companies struggle to police their supply chains. Voluntary deforestation ambitions have failed, including the Consumer Goods Forum’s 2010 pledge to “achieve net zero deforestation” by 2020. In 2014, more than 200 companies pledged in the New York Declaration on Forests to eliminate deforestation by 2030, but they missed an interim target to halve deforestation by 2020.
Kellogg backed both initiatives and in a 2020 report identified a variety of reasons for the failure, including a lack of coordination between organisations, inconsistent regulations and opaque supplier ownership. It is among the companies working to fulfil the longer-term commitment of the New York Declaration on Forests to eliminate deforestation by 2030.
In 2021, leaders from more than 100 countries agreed to a deal at the COP26 climate summit aiming to end and then reverse deforestation by 2030.
The EU’s regulations aim to reduce the destruction of forests for economic activity and fight global warming. Trees absorb carbon dioxide, and forest loss and damage has caused around 10% of global warming, according to nonprofit World Wildlife Fund.
“Combating deforestation is an urgent task for this generation, and a great legacy to leave behind for the next,” Frans Timmermans, the EU official overseeing the bloc’s climate plans, said when political agreement on the regulations was reached in December.
The EU rules apply to companies meeting the bloc’s broad definition of an “operator,” which includes a business importing into the EU, exporting from it, or putting products on the bloc’s market. Operators can be big agribusinesses such as Cargill and Bunge supplying companies in the bloc, but also EU subsidiaries importing commodities to manufacture and sell products.
Guillaume Croisant, a Brussels-based lawyer at Linklaters, said that because the rules will be enforced by national officials, there could be discrepancies as “some authorities may be harsher.”
The EU has estimated the combined yearly due-diligence costs for importers to comply with the new rules could be as high as €2.6 billion a year, equivalent to roughly $2.8 billion.
Fast-moving consumer goods companies using coffee, cocoa, palm oil and soy could be hit with big compliance costs from the reporting requirements to trace precise geolocations as well as potential reorganisation of supply chains that are unable or unlikely to be compliant, according to an analyst report from Barclays.
The EU rules are expected to become stricter over time. A review on expanding them is scheduled in two years and some policy makers are pushing to have corn added to the list of commodities covered and for the financial sector to be regulated under the rules.
In the U.S., Democrats in Congress are pushing for similar legislation called the Forest Act. Sen. Brian Schatz, a Hawaii Democrat who is spearheading the effort, said the U.S. needs to follow the EU in enacting deforestation regulations on trade.
“If we do nothing, the U.S. market will become a dumping ground for commodities that can no longer make their way into Europe,” he said. “While companies talk a big game on preventing deforestation, we can no longer allow them to police themselves.”
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The ASX 200 rose about 0.27% as energy and materials advanced. Woodside and gold miners gained while financials and technology weakened.
The Australian sharemarket rebounded from its lowest close in three months on Wednesday, with energy and materials companies leading a cautious recovery.
The S&P/ASX 200 finished approximately 23 points, or 0.27 per cent, higher at 8,695.6 on 16 September. A second data source placed the closing index at 8,696.5, up 24 points or 0.28 per cent. The official close should be confirmed through a licensed feed before publication.
The broader All Ordinaries added 25.2 points, or 0.28 per cent, to 8,874.5.
Energy was the strongest sector, rising 2.19 per cent as Australian producers reflected the previous overnight increase in global oil prices. Woodside gained 2.84 per cent. Brent had settled near US$108.75 a barrel before the local session, although it later traded around US$107.68.
Materials advanced 1.28 per cent and provided the largest positive contribution to the index. Gold producers featured prominently among the strongest stocks, with Pantoro rising 9.3 per cent and St Barbara gaining 8.18 per cent. BCI Minerals added 7.48 per cent.
Financials fell 0.37 per cent, detracting from the benchmark despite earlier strength. Rate expectations remained a significant influence after Westpac joined the other major banks in forecasting a possible Reserve Bank increase in November. Higher rates can expand bank margins in some circumstances but also raise funding costs and increase the risk of loan stress and slower credit growth.
Technology remained weak. Life360 declined 5.46 per cent, while healthcare names that had rallied during Tuesday’s sell-off gave back ground. 4DMedical lost 5.35 per cent and Telix Pharmaceuticals fell 4.96 per cent.
James Hardie dropped 5.23 per cent. Codan moved against the weaker technology tone, gaining 7.51 per cent.
The session produced positive breadth, with more advancers than decliners among the largest 250 stocks, but the broader backdrop remains unsettled. Oil prices have revived inflation concerns, bond yields are elevated and investors are assessing the prospect of further monetary tightening in Australia and the United States.
The rebound therefore recovered only part of Tuesday’s 0.9 per cent decline. For Thursday, investors will be watching overnight central-bank developments, energy markets and whether gains can broaden beyond resources.
Market dashboard — 16 September 2026
S&P/ASX 200* Approximately 8,695.6, up 23.1 points or 0.27 per cent; verify the official closing print
All Ordinaries: 8,874.5, up 25.2 points or 0.28 per cent
Best-performing sector: Energy, up 2.19 per cent
Materials: Up 1.28 per cent
Weak sector: Financials, down 0.37 per cent
Leading mover: Pantoro, up 9.30 per cent
Notable large-cap mover: Woodside, up 2.84 per cent
Notable loser: Sunrise Energy Metals, down 6.22 per cent
Life360: Down 5.46 per cent
Australian dollar: About US71.3 cents in the preceding market snapshot
Gold: Approximately US$4,375 an ounce in the afternoon snapshot
Brent crude: Approximately US$107.68 a barrel in the afternoon snapshot
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