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Originally hailed as a landmark regulation that would curb the global crisis of deforestation.

But, the final version of the EU's deforestation regulation, once heralded as the flagship policy of the Green Deal, has emerged in a severely weakened state, prompting alarm from its original architect and environmental politicians.

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

Schally cautioned that fewer obligated actors, fewer data points, and imprecise sourcing details would complicate the task of authorities.

A Watered-Down Law

Green party MEP a leading green politician was more blunt, labeling the delays, loopholes and exemptions – including one for paper goods – as the "political dismantling" of the law.

This outcome stands in stark contrast to the demands of over 1.2 million European citizens who supported an initiative in 2020 calling for a prohibition of deforestation-linked products.

When launched in 2021, the EU's climate chief the European commissioner called it "the toughest law ever put forward to fight forest loss."

A Story of Dilution

The law's unravelling has been interpreted as the European Union retreating from its green talk. It faced two major postponements, reportedly over IT issues, which drew condemnation.

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

In its first draft, the regulation mandated that firms to trace goods to their specific geographic origin using geolocation data, making them liable for forest loss along their supply lines with penalties and large financial penalties.

"This was not red tape for its own sake," Schally explained. "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

However, the strict due diligence triggered a backlash in the EU capital 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.

"Additional intense pressure has come from major export markets outside the EU," noted corporate sustainability professor, suggesting the commission gave in to some demands in trade talks.

Key Loopholes Introduced

The passed law includes several critical weakenings:

• Retailers and traders were mostly exempted from conducting rigorous checks.
• A new “low risk” category was introduced.
• A option for more reductions was opened for next spring.
• Only a handful of nations – geopolitical adversaries of the EU – will face the strictest monitoring.

"Instead of tightening downstream obligations, it stripped them back," lamented Schally. "Moving obligations upstream, it lessened the number of responsible firms."

Business Frustration

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

"It is very frustrating because we invested significant resources into complying," said Xavier Rombouts. "We invested in software, followed seminars and built a team... now they’re saying it may be changed. It’s a big frustration."

The Commission's Stance

An EU representative defended the outcome, stating: "The commission has responded to concerns and taken action to ensure a pragmatic and balanced application."

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