This paper examines
the regulatory potential of EU legislation to push forest-dependent companies
to transition from causing forest degradation towards ecologically sustainable
forest management. Such a transition is urgent because industrial logging of primary
forests.1 remains a structural part of the forest economy, contributing to
ecosystem degradation and climate instability
Using institutional
theory, this study explores how EU regulation may shape such companies’
behaviour and their business models. We apply the Lessig model (1998)2 that
argues that law can regulate, directly or indirectly, social and cultural norms
(‘norms’), market dynamics (‘market’), and the physical environment
(‘architecture’). From this perspective, we analyze the potential of the EU
Taxonomy Regulation (TR), the EU Corporate Sustainability Reporting Directive
and the European Sustainability Reporting Standards (ESRS), the EU Corporate
Sustainability Due Diligence Directive (CSDDD), the European Omnibus package,
the EU Deforestation Regulation (EUDR), and the EU Nature Restoration Law (NRL)
to urge forest-dependent companies towards new business models.
Findings indicate that
effective legislation has the potential to reconfigure industrial architecture
from primary forest logging towards ecologically sustainable forestry. However,
current EU regulation does not explicitly mandate companies to adopt
biodiversity transition plans (norms), nor effectively protect existing
European primary forests (architecture). Nonetheless, it is argued that climate
transition plans also require forest-dependent companies to shift from forest
degradation practices to ecologically sustainable forest management. This
transition is essential because forests play a crucial role in absorbing carbon
emissions and in providing climate stability.