One year on, the EU has chosen to shift away from human rights values, prioritising business interests. On 9 December, the Council and the European Parliament reached a provisional agreement on the Omnibus I package, slashing due diligence and reporting obligations under both the Corporate Sustainability Reporting Directive (CSRD) and the CSDDD, in the name of simplification and competitiveness.
On 16 December, the European Parliament voted in favour of the agreement, with 428 votes in favour, 218 against and 17 abstentions. This represents one of the final steps towards the adoption of the Omnibus I package. The agreement still requires formal approval by Member States in the EU Council before entering into force.
Despite this pending approval, the agreement significantly reduces companies’ obligations to identify, prevent and address human rights abuses in their operations and supply chains.
What changed?
- Scope reductions: The employee threshold for companies covered by the CSDDD is raised to 1,000 employees, and listed SMEs are removed from the scope. In addition, a net turnover threshold of over €450 million is introduced.
- Risk-based approach: Companies are allowed to apply a narrower, risk-based approach to identifying impacts, with stricter limits on the information they can request from business partners with fewer than 5,000 employees.
- Civil liability weakened: The provisional agreement removes the EU-wide harmonised civil liability regime and the requirement for Member States to treat liability rules as overriding mandatory law. A review clause has been inserted instead, postponing any meaningful accountability mechanism.
- CSRD rollbacks: Companies are granted the right to refuse information requests deemed “out of scope,” and financial holding companies are exempted from CSRD requirements.
- Transition exemptions: “Wave one” companies that began reporting in 2024 are temporarily exempted for 2025 and 2026.
- Further CSDDD limitations: Although not initially proposed by the Commission, the agreement raises the CSDDD thresholds to 5,000 employees and €1.5 billion in net turnover.
- Penalties capped: Sanctions are limited to a maximum of 3% of a company’s net worldwide turnover, with further guidance left to the Commission.
- Delayed implementation: The CSDDD transposition deadline is postponed to 26 July 2028, with companies required to comply only from July 2029.
Overall, the framework grants companies extensive flexibility, placing significant trust in corporate self-assessment and disclosure of sustainability risks and impacts, ignoring the overwhelming evidence that voluntary approaches have failed to prevent exploitation and forced labour.
The Council and the European Parliament went even further than the Commission’s initial proposal, which was already expected to reduce the number of companies subject to reporting obligations by around 80%, pushing this reduction closer to 90%.
As noted by the Business & Human Rights Resource Centre: “But the fight for corporate justice is far from over. Member States now have less than three years to incorporate the CSDDD into national law, and crucially, can still correct the damage they allowed to be done in Brussels. This will require bold political leadership to restore and strengthen core protections, and to put people and planet before profit and corporate capture that is threatening our democracies.“
La Strada International expresses serious concerns over the risks of undermining alignment with international standards, including the UN Guiding Principles on Business and Human Rights, the lack of mandatory obligations for companies with great economic and human impact in Europe and worldwide. This allows for the continuation of an economic and consumption system that deeply depends on the exploitation of workers.
These concerns have also been raised at the highest international level. UN High Commissioner for Human Rights Volker Türk has publicly expressed regret that proposals under consideration risk undermining the Directive’s effectiveness, enforceability and integrity. He warned that restricting what information companies can request from suppliers and business partners directly limits their ability to identify and address human rights risks.
Early this month, SOMO exposed the corporate interests behind strong lobbyist efforts to weaken the CSDDD. According to leaked documents, a coalition of 11 largely US-based multinationals allegedly worked, under the banner of a “Competitiveness Roundtable”, to undermine EU laws ensuring corporate accountability for human rights and environmental harm.
The lobbying campaign also had the support of the US government, which openly exerted pressure against the CSDDD. In a Financial Times opinion article, a US Ambassador argued that “Europe should repeal the directive that’s killing growth”. At the same time, non-EU countries were reportedly mobilised to influence EU decision-making, with efforts aimed at securing a right-wing majority in the European Parliament and pushing CSDDD changes through US-EU trade negotiations.