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Europe’s sawn timber industry is grappling with growing strategic uncertainty and rising compliance costs while the EU prepares to delay implementation of its landmark anti-deforestation law for a second time.
While the postponement of the EU Deforestation Regulation (EUDR) to December 2026 may offer temporary relief, it also threatens to erode market incentives for early adopters and undermine confidence in the bloc’s regulatory direction.
Producers across the continent have already invested billions of euros to meet the regulation’s demanding traceability requirements—developing digital platforms, upgrading Enterprise Resource Planning (ERP) systems, and restructuring supply chains to prove that every cubic meter of wood originates from deforestation-free sources.
Yet with the European Commission citing technical issues with its IT compliance platform, companies now face a paradox: having spent heavily to comply, they must wait longer to see those efforts rewarded.
In a strongly worded letter to the EC’s Environment Commissioner Jessika Roswall, a coalition of civil society organizations—including VOICE Network, Fern, Mighty Earth, and others—urged the European Commission to uphold the original EUDR timeline and resist calls for further delay.
The signatories, representing stakeholders across cocoa, coffee, rubber, wood, and agri-food sectors, warned that postponing enforcement would reward non-compliance, penalize responsible businesses, and risk undermining the EU’s credibility as a global leader in forest protection.
They emphasized that many companies had already made significant investments in good faith, and that further uncertainty could erode trust, increase costs, and weaken momentum toward deforestation-free supply chains.
The financial and operational burden of EUDR compliance is already being felt across the European sawn timber sector. Industry estimates suggest that companies have collectively spent billions of euros preparing for the regulation, despite its uncertain timeline.
In Germany, initial compliance costs for the wood industry are pegged at €1.8 billion ($2.1 billion), with annual expenses projected at €1.2 billion, according to the Germany’s association of wood industry, Hauptverband der Deutschen Holzindustrie (HDH). Yet only 39% of timber companies say they are currently on track to meet EUDR obligations—underscoring the scale of the challenge.
In Finland, research by Pellervo Economic Research (PTT), a non-profit economic research organization, estimates that domestic companies will face €207 million in start-up costs and €65 million annually to maintain compliance, with forest-based industries absorbing most of the impact.
Major Nordic producers have already rolled out sophisticated traceability systems. Stora Enso’s Packaging Materials Division reached EUDR readiness a year ahead of schedule by deploying a digital platform developed with Solita that integrates supplier and customer data.
Metsä Group has built its own cloud-based MetsäTrace system, linking its ERP network with the EU TRACES database to manage reference data across pulp and sawn timber operations. Versowood has similarly upgraded its ERP systems to enable full-chain traceability from logs to finished products.
These efforts have required significant capital outlays—new hires, software development, satellite data acquisition, and tighter segregation of raw materials—all aimed at proving that every cubic meter of wood is deforestation-free.
Companies that moved early to meet EUDR requirements now face a strategic dilemma. While some markets had begun offering premiums for verified deforestation-free wood, those incentives risk fading amid renewed regulatory uncertainty.
“This second postponement creates more uncertainty for companies that have worked hard to meet the deadline,” Ruth Nussbaum, executive director of sustainability consultancy Proforest, said. “However, many businesses are still moving ahead because they see the long-term benefits.”
Others may now hesitate. Germany’s HDH warns that “a growing number of suppliers are pausing EUDR investments until political clarity is restored.” In Austria, the Sawmill Industry Association has voiced concern that full-chain traceability across mixed log supplies is “simply unworkable” in its current form. Chairman Markus Schmölzer warned that the regulation could lead forest owners to curb harvesting or production, with potential drops in Austrian wood output of up to 10%.
Meanwhile, civil society groups have also urged the Commission not to bow to external pressure. A recent Euractiv report noted that US-based organizations are lobbying Brussels to resist Washington’s push for preferential treatment or further delays.
Despite the uncertainty, analysts advise companies to stay the course. EUDR’s underlying due-diligence obligations are expected to remain intact even if deadlines shift.
“There’s a competitive edge to early compliance,” an industry advisor familiar with Nordic producers said. “Those traceability systems will be valuable for sustainability reporting and future digital product passports.”
Compliance remains uneven, and the cost differential is stark. For large firms, HDH estimates compliance costs could average about 0.1% of revenue, but for small and medium-sized enterprises the burden could be roughly three times higher in relative terms.
Still, the companies are unlikely to pass on the increased costs to customers.. These investments are largely capital expenditures, not operating costs. And with the European sawn timber market already facing depressed demand and high raw material prices, producers say it is unfeasible to raise prices.
“We are talking to our customers to make them aware of our compliance-related investments,” a representative of a Nordic wood processing company said, “but we don’t see these costs being reflected in our prices.” An industry consultant added: “It’s up to the buyers to decide whether they’ll pay premiums if EUDR is not mandatory.”
The proposed deferral still requires formal approval, but few expect resistance in Brussels. Under the current draft, large companies would have until 30 December 2026 to comply, with small operators following six months later in June 2027.
Some lawmakers are also pushing for the creation of a “negligible-risk” country category, which could simplify trade for nations with robust forest governance. If adopted, that change would significantly narrow the regulation’s scope.
For Europe’s sawmills, the investment in compliance systems is already sunk. Whether it becomes a competitive advantage or a costly lesson in regulatory overreach will now depend on how—and when—the EUDR finally takes effect.
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