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It was a groundbreaking law that would combat the global crisis of forest loss.

But, the revised version of the European Union's deforestation regulation, once heralded as the flagship policy 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 stripped," stated the law's original author, citing the exclusion of crucial requirements for downstream traders to verify the provenance 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 imprecise sourcing details would make enforcement and prosecution more difficult.

A Watered-Down Law

Environmental MEP a leading green politician went further, labeling the postponements, exceptions and new loopholes – 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 signed a petition in 2020 demanding a prohibition of deforestation-linked products.

When launched in 2021, then-Green Deal commissioner Frans Timmermans trumpeted it as "the most ambitious law proposed to fight deforestation."

From Ambition to Compromise

The law's unravelling has been interpreted as the EU walking back its green talk. The proposal encountered two major postponements, reportedly over technical problems, which drew condemnation.

"By reopening this file instead of solving a simple IT problem, the commission opened Pandora’s box," commented the Green MEP.

In its first draft, the regulation required companies to track commodities to their specific geographic origin using geolocation data, making them liable for deforestation in their supply chains with penalties and large financial penalties.

"It wasn't bureaucracy for its own sake," Schally explained. "It was the mechanism that ensured enforcement, established traceability, and stopped companies from hiding behind complex supply chains."

Mounting Pressure

However, the strict due diligence provoked opposition in the EU capital from multinational corporations, exporting nations, conservative political groups and member states with forestry industries.

Analysts point to last year's European Parliament elections as a decisive moment, shifting the balance of power more skeptical of green regulations.

"Additional intense pressure came from major export markets outside the EU," noted corporate sustainability professor, implying the EU yielded to some requests during negotiations.

Key Loopholes Introduced

The passed law features key dilutions:

• Retailers and traders were mostly exempted from submitting due diligence statements.
• A new “low risk” category 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 rules for companies, it stripped them back," lamented Schally. "By shifting responsibilities to producers, it lessened the number of responsible firms."

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 complying," said Xavier Rombouts. "We invested in software, followed seminars and built a team... now they’re saying it could be altered again. It’s a major letdown."

Official Defense

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

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