Darling Ingredients Navigates Regulatory Gains and Environmental Scrutiny

Shares of Darling Ingredients experienced a significant boost this week following favorable regulatory developments for biofuels, even as new environmental concerns emerged around one of its key joint ventures. The company finds itself at a crossroads, balancing regulatory tailwinds against growing ESG-related challenges in its supply chain.

Strong Market Response to EPA Announcement

The recent upward momentum was triggered by a Tuesday announcement from the U.S. Environmental Protection Agency. The EPA proposed options for redistributing small refinery exemptions within the Renewable Fuel Standards program for 2026-2027. This potential strengthening of the biofuel industry propelled Darling Ingredients stock to surge 9.7 percent during Tuesday’s trading session. Market experts interpret this development as a clear indication that regulatory support for sustainable fuels remains robust.

Expansion Initiatives Continue Amid Challenges

Despite facing environmental headwinds, Darling Ingredients maintains its strategic growth trajectory. The company’s planned joint venture with Tessenderlo Group, announced in May and named Nextida™, aims to enhance its health and nutrition portfolio while generating approximately $1.5 billion in annual revenue. Additionally, Darling is investing $315 million in a sustainable aviation fuel project in Port Arthur, which is expected to convert up to 50 percent of its annual 470-million-gallon capacity to SAF production.

Should investors sell immediately? Or is it worth buying Darling Ingredients?

Investors will closely monitor the upcoming quarterly results scheduled for October 23. Consensus estimates project earnings per share of $0.24, significantly higher than the year-ago figure of $0.11. Analyst sentiment remains generally positive, with an average price target of $43.57.

Environmental Controversy Emerges

Simultaneously with these positive developments, the company faces mounting challenges regarding its environmental credentials. The Diamond Green Diesel joint venture—a 50/50 partnership with Valero Energy—has come under scrutiny following Monday reports suggesting potential connections between its Brazilian tallow processing facilities and illegal deforestation in the Amazon rainforest. The situation presents a notable paradox: a company that has benefited from over $3 billion in U.S. tax credits for biofuel production now confronts allegations that appear to contradict its sustainability mission.

The central question remains whether Darling Ingredients can successfully balance regulatory-driven growth with essential environmental accountability. How the company addresses these ESG concerns may well serve as a critical test case for the entire sustainable fuel industry’s credibility.