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Originally hailed as a pioneering piece of legislation that would combat the worldwide scourge of forest loss.

But, the revised version of the EU's deforestation regulation, previously heralded as the crown jewel of the European Green Deal, has been passed in a significantly diluted state, prompting alarm from its original architect and green lawmakers.

"It has been hollowed out," said Hugo Schally, citing the removal of key obligations for later-stage companies to check the origin of commodities like palm oil, soy, wood, beef, rubber, cocoa and coffee.

Schally cautioned that fewer obligated actors, fewer data points, and imprecise sourcing details would make enforcement and prosecution more difficult.

A Watered-Down Law

Environmental vice-president Marie Toussaint was more blunt, labeling the postponements, exceptions and new loopholes – including one for paper goods – as the "political dismantling" of the law.

This final text is a far cry from the demands of more than a million European citizens who supported an initiative in 2020 calling for a prohibition of deforestation-linked products.

At its launch in 2021, then-Green Deal commissioner Frans Timmermans called it "the most ambitious legislation proposed to combat forest loss."

From Ambition to Compromise

The regulation's dilution is seen by critics as the European Union retreating from its green talk. It faced two major postponements, reportedly over technical problems, which drew condemnation.

"By reopening this file rather than fixing a simple IT problem, the commission opened Pandora’s box," remarked the Green MEP.

Originally, the law required companies to track commodities to their exact plot of land using geolocation data, making them liable for forest loss along their supply lines with penalties and large financial penalties.

"It wasn't bureaucracy for its own sake," Schally said. "It was the mechanism that made the rules enforceable, created a verifiable paper trail, and prevented firms from obscuring their activities behind opaque production networks."

Intense Lobbying

Yet, the strict due diligence triggered a backlash in Brussels from large companies, producer countries, rightwing parties and member states with forestry industries.

Analysts point to last year's European Parliament elections as a turning point, shifting the balance of power more skeptical of environmental rules.

"The other pressure came from major export markets like the United States," noted corporate sustainability professor, suggesting the EU yielded to some requests during negotiations.

Key Loopholes Introduced

The passed law features key dilutions:

• Retailers and traders were mostly exempted from conducting rigorous checks.
• A new exemption for small operators was introduced.
• A window for further "simplifications" was established for next spring.
• Only four countries – Russia, Belarus, North Korea and Myanmar – will face the strictest monitoring.

"Rather than strengthening downstream obligations, it stripped them back," lamented the law's author. "By shifting responsibilities upstream, it lessened the number of responsible firms."

Uncertainty for Companies

The delays and changes have also caused frustration for businesses that complied early.

"It is very frustrating because we invested significant resources into preparing," stated a coffee company executive. "We invested in software, followed seminars and built a team... now they’re saying it could be altered again. It’s a big frustration."

The Commission's Stance

A commission spokesperson defended the outcome, saying: "The commission has responded to concerns and acted to ensure a pragmatic and balanced application."

"The new text ensures stability, which is crucial for companies and competent authorities to successfully implement this very important law."