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It was a pioneering piece of legislation that would combat the worldwide scourge of forest loss.

But, the revised version of the EU's deforestation regulation, once heralded as the crown jewel of the Green Deal, has been passed in a significantly diluted state, prompting criticism from its initial author and green lawmakers.

"The regulation was gutted," said the law's original author, citing the exclusion of crucial requirements for later-stage companies to check the provenance of products like coffee, cocoa, beef, soy, palm oil, rubber and timber.

Schally cautioned that a reduced number of responsible companies, fewer data points, and less precise origin data would complicate the task of authorities.

A Watered-Down Law

Environmental vice-president Marie Toussaint was more blunt, labeling the postponements, exceptions and new loopholes – such as one for paper goods – as the "political dismantling" of the law.

This outcome is a far cry from the demands of over 1.2 million European citizens who supported an initiative in 2020 demanding a prohibition of deforestation-linked products.

When launched in 2021, then-Green Deal commissioner Frans Timmermans called it "the toughest legislation 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 significant delays, reportedly over IT issues, which drew condemnation.

"By revisiting the legislation rather than fixing a technical issue, the commission opened Pandora’s box," remarked Toussaint.

Originally, the regulation required companies to trace commodities to their exact plot of land using geolocation data, making them liable for deforestation in their supply chains with criminal charges and hefty fines.

"This was not red tape for its own sake," Schally said. "It was the mechanism that ensured enforcement, created a verifiable paper trail, and stopped companies from hiding behind opaque production networks."

Intense Lobbying

However, 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 turning point, creating a new political majority more skeptical of green regulations.

"Additional intense pressure came from big trading partners outside the EU," said corporate sustainability professor, suggesting the commission gave in to some demands in trade talks.

Key Loopholes Introduced

The passed law features key dilutions:

• Downstream operators were largely freed from submitting due diligence statements.
• A new exemption for small operators was created.
• A window for further "simplifications" was established for next spring.
• Only four countries – geopolitical adversaries of the EU – will face the strictest monitoring.

"Instead of tightening rules for companies, it stripped them back," lamented Schally. "Moving obligations to producers, it reduced accountability."

Uncertainty for Companies

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

"We feel very annoyed 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 big frustration."

The Commission's Stance

An EU representative defended the outcome, saying: "We have listened to concerns and taken action to ensure a simple, fair and cost-efficient implementation."

"The revised regulation provides for predictability, which is key for business and national regulators to successfully implement this very important regulation."