UK proposes £1m revenue threshold for deforestation due diligence

By Olivia Hart

A UK consultation would require companies with annual global revenues above £1 million that use coffee, cocoa, cattle, soy, oil palm, rubber, timber or products derived from them to assess illegal-deforestation risks in their supply chains; the consultation closes January 17, 2027.

The proposal asks those businesses to ensure their supply chains do not drive illegal deforestation. It does not yet propose barring commodities that do not meet a deforestation-free standard. Instead, the government records an ambition to transition to such a standard in future. A consultation is not a finished rule, and its enforcement terms remain unsettled.

What would businesses have to prove?

The proposed rules would ask covered companies to show how products entered their supply chains and where they originated. The government describes the core structure as an effective due diligence system:

• Identify: Determine which products fall within the rules, using harmonized system codes.
• Trace: Establish commodity traceability, with geolocation data collected as evidence of origin.
• Assess: Evaluate the risk of non-compliance in the supply chain.
• Mitigate: Reduce identified risks of non-compliance to a negligible level.

Together, those steps would require a company to trace a commodity, test the risk of non-compliance and reduce identified risks to a negligible level. The stated objective goes further than risk scoring: businesses must ensure they do not drive illegal deforestation.

Takeaway: Companies would have to document where goods came from and reduce any illegal-deforestation risk they identify.

Which commodities and businesses would be in scope?

• Commodities: Coffee, cocoa, cattle, soy, oil palm, rubber and timber, together with products derived from them.
• Threshold: Companies with annual global revenues greater than £1 million that use the listed commodities or derivatives.

The consultation also asks how the rules should apply to particular products and types of business. Those details remain part of the consultation rather than a fixed regulatory perimeter.

Supermarkets have called for stronger regulation to help tackle deforestation in product supply chains. Their position gives the proposal a clear commercial constituency, even though the government has not identified individual retailer commitments.

Takeaway: The proposal starts with seven global commodity chains and a £1 million revenue test, not every business handling them.

Why is the government consulting now?

The government links UK consumption of goods associated with the production of internationally traded commodities to approximately 29,000 hectares of deforestation worldwide each year and 9.4 million tonnes of related carbon emissions. The estimate sets the scale of the problem the proposal seeks to address.

Environment Secretary Dame Angela Eagle said: “British consumers want to feel confident that the everyday goods they buy are not driving devastating illegal deforestation abroad, and so we are stepping in to give them that certainty.”

That is a prevention-first approach, with traceability and risk reduction ahead of any broader exclusion of commodities.

Takeaway: The government connects everyday purchasing to 29,000 hectares of annual deforestation, but proposes due diligence rather than immediate exclusion.

How does this compare with the EU?

The UK proposal would cover the same commodity categories as the EU’s Deforestation Regulation, known as the EUDR, and set similar traceability and due diligence requirements. The alignment extends beyond the list of commodities to the way companies would document and assess risk.

The material difference is the starting legal test. The UK has not proposed immediate exclusion of commodities that do not meet a deforestation-free standard, although it retains its stated ambition to move to one later.

The EU Commission has separately said that simplification of the EUDR would cut costs for companies by 75%. That figure concerns EU simplification, not a cost estimate published for the UK consultation.

Takeaway: The commodity list matches the EU, but the proposed UK rules would not immediately bar commodities lacking deforestation-free status.

What happens next?

The Department for Environment, Food and Rural Affairs consultation will remain open until January 17, 2027. It seeks views on:

• The products and businesses that should fall within the rules.
• Requirements for an effective due diligence system.
• How businesses should identify, assess and mitigate illegal-deforestation risks.
• Annual reporting at different points in the supply chain.
• Enforcement and compliance measures, including monetary penalties.

The consultation treats enforcement as part of the regime, not an afterthought. Reporting and penalties will determine whether the proposed traceability duties have practical force.

Takeaway: The January 17, 2027 consultation close is the next regulatory gate; the government’s final scope and enforcement terms will determine whether the £1 million threshold becomes an enforceable obligation.