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Originally hailed as a pioneering law that would combat the global crisis of forest loss.

However, the final version of the European Union's deforestation regulation, once heralded as the flagship policy of the European Green Deal, has emerged in a significantly diluted state, prompting criticism from its initial author and environmental politicians.

"The regulation was hollowed out," said Hugo Schally, pointing to the removal of crucial requirements for later-stage companies to check the origin of products like coffee, cocoa, beef, soy, palm oil, rubber and timber.

He warned that fewer obligated actors, less information collected, and less precise origin data would make enforcement and prosecution more difficult.

Political Dismantling

Green party MEP Marie Toussaint went further, describing the postponements, exceptions and new loopholes – including one for paper goods – as the "systematic weakening" of the law.

This outcome stands in stark contrast to the demands of over 1.2 million European citizens who signed a petition in 2020 demanding a prohibition of deforestation-linked products.

At its launch in 2021, the EU's climate chief Frans Timmermans called it "the most ambitious legislation ever put forward to combat deforestation."

From Ambition to Compromise

The law's unravelling is seen by critics as the EU walking back its environmental promises. The proposal encountered two major postponements, reportedly over technical problems, which drew condemnation.

"By revisiting the legislation instead of solving a technical issue, the commission opened Pandora’s box," remarked the Green MEP.

In its first draft, the law mandated that firms to track commodities to their exact plot of land using GPS coordinates, making them liable for forest loss along their supply lines with penalties and hefty fines.

"It wasn't bureaucracy for its own sake," Schally said. "It was the mechanism that made the rules enforceable, established traceability, and prevented firms from obscuring their activities behind complex supply chains."

Mounting Pressure

However, the strict due diligence provoked opposition in the EU capital from multinational corporations, producer countries, conservative political groups 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 big trading partners outside the EU," said corporate sustainability professor, implying the EU yielded to some demands in trade talks.

Key Loopholes Introduced

The passed law includes key dilutions:

• Retailers and traders were mostly exempted from conducting rigorous checks.
• A new exemption for small operators was created.
• A window for further "simplifications" was opened for next spring.
• Only four countries – geopolitical adversaries of the EU – will face the strictest monitoring.

"Rather than strengthening rules for companies, it rolled them back," lamented Schally. "Moving obligations upstream, it lessened the number of responsible firms."

Business Frustration

The protracted process and revisions have also caused frustration for companies that prepared in advance.

"It is very frustrating because we invested significant resources into preparing," said Xavier Rombouts. "We purchased systems, trained staff and established procedures... now they’re saying it could be altered again. It’s a major letdown."

The Commission's Stance

An EU representative defended the outcome, saying: "We have listened to concerns and acted to ensure a pragmatic and balanced implementation."

"The revised regulation ensures stability, which is key for business and national regulators to successfully implement this vitally important regulation."