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Widely celebrated as a pioneering law that would combat the worldwide scourge of forest loss.

However, the final version of the European Union's deforestation regulation, previously heralded as the flagship policy of the European Green Deal, has been passed in a significantly diluted state, prompting alarm from its initial author and green lawmakers.

"The regulation was hollowed out," stated the law's original author, citing the exclusion of key obligations for downstream traders to check the origin of commodities like palm oil, soy, wood, beef, rubber, cocoa and coffee.

Schally cautioned that a reduced number of responsible companies, fewer data points, and less precise origin data would hinder monitoring and legal action.

A Watered-Down Law

Green party MEP Marie Toussaint was more blunt, describing the delays, loopholes and exemptions – including one for paper goods – as the "political dismantling" of the law.

This final text stands in stark contrast to the demands of more than a million European citizens who supported an initiative in 2020 calling for a ban on deforestation-linked products.

At its launch in 2021, the EU's climate chief the European commissioner trumpeted it as "the most ambitious legislation ever put forward to combat deforestation."

A Story of Dilution

The law's unravelling has been interpreted as the European Union retreating from its environmental promises. The proposal encountered significant delays, ostensibly over IT issues, which sparked criticism.

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

In its first draft, the regulation required companies to trace goods back to their exact plot of land using geolocation data, making them liable for forest loss along their supply lines with criminal charges and hefty fines.

"This was not red tape for its own sake," the former official said. "These rules were the tool that ensured enforcement, created a verifiable paper trail, and prevented firms from obscuring their activities behind complex supply chains."

Intense Lobbying

Yet, the strict due diligence triggered a backlash in the EU capital from large companies, exporting nations, conservative political groups and EU logging states.

Experts cite last year's European Parliament elections as a decisive moment, creating a new political majority less favorable toward environmental rules.

"Additional intense pressure came from big trading partners like the United States," said corporate sustainability professor, suggesting the EU yielded to some requests during negotiations.

Key Loopholes Introduced

The passed law features key dilutions:

• Downstream operators were mostly exempted from submitting due diligence statements.
• A new exemption for small operators was created.
• A option for more reductions was opened for next spring.
• Only a handful of nations – geopolitical adversaries of the EU – will face “high risk” scrutiny.

"Rather than strengthening downstream obligations, it rolled them back," said the law's author. "Moving obligations to producers, it reduced accountability."

Uncertainty for Companies

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," stated Xavier Rombouts. "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

An EU representative supported the final law, stating: "The commission has responded to concerns and acted to ensure a pragmatic and balanced implementation."

"The new text provides for predictability, which is crucial for companies and competent authorities to effectively enforce this very important regulation."