The criteria of the EU Taxonomy for forestry and afforestation were formally adopted through delegated acts in 2021 and 2022, while their application in reporting began gradually in 2022 for large companies and financial institutions within the EU. Since 2024, taxonomy reporting has been expanded and applied in greater detail through the Corporate Sustainability Reporting Directive (CSRD), which now covers an increasing number of large companies.
The direct obligation to align with the taxonomy applies to large companies in the EU, which must disclose the share of their activities that are taxonomy-eligible and taxonomy-aligned, supported by clearer structures of data, methodologies, and evidence. However, indirect effects also extend to entities outside the EU, including companies from Bosnia and Herzegovina when they are part of value chains or business relationships with companies subject to CSRD requirements. In practice, these companies increasingly request comparable and verifiable information from their suppliers and partners.
In the forestry and afforestation sector, activities are considered taxonomy-sustainable only if they meet technical criteria linking forest management to climate and environmental objectives. This includes sustainable forest management, biodiversity protection, soil and water conservation, long-term carbon storage, and proof that the activity does not cause significant harm to other environmental objectives. Afforestation and land restoration projects must have clearly defined plans, realistic care and protection measures, and monitoring of results over time, since sustainability within this framework is not demonstrated by intention but by documented processes and measurable outcomes.
In practice, the application of the taxonomy is increasingly reflected through standardized requirements for data reliability and quality in the forestry and wood-processing sectors. In Bosnia and Herzegovina, this is particularly relevant due to the export-oriented nature of the wood industry and the fact that EU buyers increasingly expect clear information on the origin of raw materials, forest management practices, protection regimes, habitat status, and measures taken to prevent forest degradation. The taxonomy indirectly reinforces the need for companies and institutions to maintain well-organized records and consistent practices, from forest management plans and logging permits to the control of harvesting and transport, as well as monitoring reforestation, forest regeneration, and protection against fires, pests, and diseases.
Although formal reporting obligations do not currently apply to SMEs in Bosnia and Herzegovina, expectations are transmitted through contractual requirements, tender documentation, supplier assessments, and the growing need for verifiable and comparable information about forest resources. This raises several practical issues in Bosnia and Herzegovina that go beyond the reporting format itself, including strengthening wood traceability systems, improving the quality and availability of data in forest management plans and operational records, ensuring consistent implementation of nature protection measures, and maintaining clear documentation on reforestation and forest regeneration activities. In this sense, the practical application for the region is already taking place, as the market increasingly rejects general claims and instead demands verifiable information on origin, management practices, and actual results in the field.
