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Widely celebrated as a groundbreaking law that would combat the global scourge of forest loss.

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

"The regulation was gutted," said the law's original author, pointing to the exclusion of crucial requirements for downstream traders to verify the provenance of products like coffee, cocoa, beef, soy, palm oil, rubber and timber.

Schally cautioned that a reduced number of responsible companies, less information collected, and imprecise sourcing details would complicate the task of authorities.

Political Dismantling

Green party MEP Marie Toussaint went further, describing the delays, loopholes and exemptions – including one for printed products – as the "political dismantling" of the law.

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

At its launch in 2021, then-Green Deal commissioner the European commissioner called it "the toughest legislation ever put forward to fight forest loss."

A Story of Dilution

The regulation's dilution is seen by critics as the European Union retreating from its green talk. It faced two major postponements, ostensibly over IT issues, which drew condemnation.

"By revisiting the legislation instead of solving a technical issue, the commission opened Pandora’s box," commented Toussaint.

Originally, the regulation required companies to trace goods back to their specific geographic origin using GPS coordinates, holding them accountable for forest loss along their supply lines with penalties and large financial penalties.

"This was not red tape for its own sake," Schally said. "These rules were the tool that made the rules enforceable, established traceability, and stopped companies from hiding behind complex supply chains."

Mounting Pressure

However, the strict due diligence triggered a backlash in Brussels from multinational corporations, exporting nations, conservative political groups and member states with forestry industries.

Experts cite last year's EU elections as a decisive moment, shifting the balance of power less favorable toward green regulations.

"Additional intense pressure has come from major export markets outside the EU," said corporate sustainability professor, suggesting the EU yielded to some requests during negotiations.

Key Loopholes Introduced

In the final legislation 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 a handful of nations – geopolitical adversaries of the EU – will face “high risk” scrutiny.

"Instead of tightening downstream obligations, it rolled them back," said Schally. "Moving obligations to producers, it lessened the number of responsible firms."

Business Frustration

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 may be changed. It’s a big frustration."

The Commission's Stance

A commission spokesperson supported the final law, stating: "The commission has responded to feedback and acted to ensure a pragmatic and balanced implementation."

"The revised regulation provides for predictability, which is key for business and national regulators to effectively enforce this vitally important law."