Today, President Ursula von der Leyen published the promised Omnibus proposal, scaling back key due diligence requirements and enforcement mechanisms.
Under the guise of “simplification”, the proposal significantly weakens the Corporate Sustainability Due Diligence Directive (CSDDD), confirming fears that corporate interests are being prioritised over human rights and sustainability. The Taxonomy Regulation, the CSDDD, and the Corporate Sustainability Reporting Directive (CSRD), three major pillars of the EU’s sustainability framework, are all set to be rolled back.
Imposed in June 2024, the CSDDD imposes mandatory human rights and environmental due diligence obligations on companies operating in the EU. This directive was designed to hold corporations accountable for their impact on people and the planet. However, today, the European Commission has moved to dismantle these obligations, with the Commission President deciding to reopen the CSDDD text under the pretext of a “simplification effort.”
These amendments come midway through the transposition process, creating legal uncertainty for companies that have already started implementing due diligence measures. Instead of providing clarity, the changes jeopardise existing progress and increase confusion rather than simplifying compliance.
The proposal dramatically narrows the scope of due diligence obligations, limiting them to direct suppliers only and reducing the number of companies covered to those with over 500 employees. Monitoring requirements are also weakened, allowing companies to conduct assessments once every five years instead of annually, as foreseen. Enforcement mechanisms are severely diluted, as the proposal removes minimum penalties and eliminates civil liability, leaving enforcement entirely at national discretion. The proposal also abandons the obligation to implement a climate transition plan, further eroding corporate responsibility. Financial institutions no longer are to be subject to additional due diligence obligations, while implementation delays would push key guidance to mid-2026.
Earlier more than 160 investors managing EUR6.6t (approx. USD6.8t) in assets had urged the European Commission to protect the EU’s sustainable finance framework. Further roundtable consultations convened by the European Commission to discuss ‘simplification’ have been criticised for their corporate-heavy composition and closed-room nature, including by 150+ CSOs reaffirming their opposition to reopening legislation. Also the UN Working Group on Business and Human Rights encouraged the EU earlier to ensure that any developments relating to the CSDDD would remain in alignment with the UN Guiding Principles on Business and Human Rights. Additionally, 240 European researchers, mainly economists, had also issued an open letter warned of the dangers of the Omnibus initiative. See also earlier CSO joint statement on the EU omnibus that LSI joined.
The Omnibus Proposal will now be discussed by the European Parliament and the Council, opening the door to weakening human rights, labour rights and sustainability safeguards. This is a remarkable step in the light of the European’s commitment to work the coming five years on promoting social fairness in the modern economy including by supporting good working conditions and fair wages. However, there is still hope—we call on the EU to reaffirm its leadership in protecting human rights, labour rights, and environmental sustainability.
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