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It was a groundbreaking regulation that would help stop the global crisis of forest loss.

However, the final version of the European Union's deforestation regulation, previously heralded as the crown jewel of the Green Deal, has been passed in a significantly diluted state, prompting criticism 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 verify the origin of products like coffee, cocoa, beef, soy, palm oil, rubber and timber.

He warned that a reduced number of responsible companies, fewer data points, and less precise origin data would make enforcement and prosecution more difficult.

Political Dismantling

Environmental MEP Marie Toussaint was more blunt, describing the delays, loopholes and exemptions – including one for printed products – as the "systematic weakening" of the law.

This outcome is a far cry from the hopes of over 1.2 million EU citizens who signed a petition in 2020 calling for a ban on deforestation-linked products.

At its launch in 2021, the EU's climate chief Frans Timmermans trumpeted it as "the toughest law ever put forward to fight forest loss."

From Ambition to Compromise

The regulation's dilution has been interpreted as the European Union retreating from its environmental promises. It faced two major postponements, ostensibly over IT issues, which sparked criticism.

"By reopening this file instead of solving a technical issue, the commission opened Pandora’s box," remarked Toussaint.

In its first draft, the law mandated that firms to track goods back to their exact plot of land using GPS coordinates, 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 stopped companies from hiding behind complex supply chains."

Mounting Pressure

Yet, the rigorous checks provoked opposition in Brussels from large companies, exporting nations, rightwing parties and member states with forestry industries.

Analysts point to last year's EU elections as a turning point, shifting the balance of power more skeptical of green regulations.

"Additional intense pressure came from big trading partners like the United States," noted corporate sustainability professor, implying the commission gave in to some requests during negotiations.

Key Loopholes Introduced

In the final legislation features key dilutions:

• Retailers and traders were mostly exempted from conducting rigorous checks.
• A new “low risk” category was created.
• 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 rules for companies, it rolled them back," said the law's author. "Moving obligations upstream, it reduced accountability."

Uncertainty for Companies

The delays and changes have also created annoyance for companies that prepared in advance.

"It is very frustrating because we invested significant resources into preparing," stated a coffee company executive. "We purchased systems, trained staff and established procedures... now they’re saying it could be altered again. It’s a big frustration."

Official Defense

A commission spokesperson defended the outcome, saying: "We have listened to feedback and acted to ensure a pragmatic and balanced implementation."

"The revised regulation ensures stability, which is key for business and competent authorities to effectively enforce this very important law."