The Omnibus process concluded earlier this year, with its legal consequences entering into force last March through the revised CSRD and CSDDD regulations. The European Commission now has six months to update the European Sustainability Reporting Standards (ESRS) accordingly, and on 6 May launched a consultation on draft revised standards. Read more under “Deregulation Watch“.
MEP Lara Wolters has been outspoken in her concern, warning that the EU risks losing its global leadership on corporate accountability in a misguided race to boost competitiveness. The CSRD, originally designed to cover over 50,000 companies, now applies only to those with net annual turnovers of €450 million or more – a reduction of approximately 85% in the number of companies required to report. Wolters acknowledges that in the name of simplification, EU law went far further than intended.
In the mean time, new guidance from the Danish Institute for Human Rights outlines how the EU’s Corporate Sustainability Due Diligence Directive should be transposed and implemented. The guidance emphasises a risk-based, purposive approach that moves beyond formal compliance to strengthen genuine corporate accountability across global value chains.
European Sustainability Reporting Standards
The draft reduces mandatory data points by over 60% and total data points by over 70%, introduces new provisions allowing companies to omit information deemed “seriously prejudicial” to their commercial interests, and limits reportable human rights incidents to those considered “substantiated.” A new voluntary standard for smaller companies introduces a “value-chain cap”, restricting what information larger companies can request from value-chain partners with 1,000 employees or fewer. Stakeholders may submit feedback until 3 June 2026, with the revised standards expected to apply from 1 January 2027. Read more on the Omnibus process.
From “corporate simplification” to “political simplification”
The rollback extends beyond reporting standards. The Commission has published a Communication on Better Regulation, adapting its internal decision-making processes in ways the European Trade Union Confederation warns favour “hand-picked corporate lobbyists” over workers and civil society. The Communication also signals measures to discourage Member States from applying higher social and environmental standards when implementing EU directives, and announces a new Action Plan on Regulatory Deep Cleaning spanning twelve policy areas. Legal scholar Professor Alberto Alemanno has warned of “constitutional regression.”
This push for political simplification comes at a deeply troubling moment. Across the EU, democratic institutions are under pressure, civic space is shrinking, and the role of civil society in shaping public policy is being progressively marginalised. Weakening the rules that require companies to disclose their human rights impacts, while simultaneously reducing the space for civil society to scrutinise and challenge those impacts, moves in the wrong direction.
For anti-trafficking and labour rights advocates, these developments are a cause for serious concern. Fewer companies covered, weaker reporting requirements, narrower definitions of reportable human rights incidents, and reduced transparency together risk creating the conditions in which exploitation can persist undetected and unaddressed in global supply chains.