Omnibus Package in a nutshell

From comprehensive to streamlined: CSDDD reforms reshape corporate responsibility

In May 2024, the European Union adopted the Corporate Sustainability Due Diligence Directive (CSDDD), establishing the first comprehensive cross-sector framework for due diligence within the EU. This directive mandates that companies meeting specific thresholds for employee count and net turnover implement robust due diligence measures.

These measures are designed to ensure that business operations and supply chains respect human rights, protect the environment, and are in line with the 2015 Paris Agreement. Companies are obligated to conduct due diligence across their entire supply chain using a risk-based approach. In response to concerns raised by the private sector about regulatory burden and complexity, efforts have been made to streamline CSDDD requirements, ensuring alignment with other regulations. 

Main changes proposed in the first Omnibus Package regarding value chain due diligence obligations:

• Value chain scope: The legal mandate for conducting due diligence will only apply to direct business partners, not the entire value chain. There will be an implied obligation to go beyond Tier 1 only if there is a complaint or credible NGO or media reports indicating harmful activities at the level of an indirect supplier. The effectiveness of due diligence relies solely on codes of conduct with direct suppliers and "contractual cascading".
• Due diligence duty: Due diligence will no longer be an ongoing obligation. Its effectiveness will be tracked only every five years. Additionally, the Omnibus Package aims to remove the duty to terminate business relationships in cases of both actual and potential adverse impacts, replacing it with the requirement to "suspend" activities instead.
• Stakeholder engagement: The Omnibus Package aims to narrow the scope to "relevant" stakeholders, limiting the stakeholders companies need to engage with. It restricts engagement to those stakeholders who have a link to the specific stage of the due diligence process being carried out.
• Legal harmonisation: The proposal prohibits EU Member States from introducing legislation that goes beyond the CSDDD.

Main Changes proposed in the first Omnibus Package regarding Climate Transition Plans:

• Weakening implementation requirements: The directive will only require companies to adopt climate transition plans, removing the obligation to actively enforce these plans. This shift will mean that companies might focus on formal adoption rather than substantive implementation, potentially reducing the impact of these plans on actual climate action.

Main changes proposed in the first Omnibus Package regarding Civil Liability:

• Deletion of the EU-wide civil liability provision: The removal of this provision will mean that there is no uniform civil liability framework across the EU, which can lead to inconsistencies in how companies are held accountable for due diligence failures. 
• Deletion of the overriding mandatory provision: This will require judges to apply the law of the country where harm occurred, complicating legal interpretations and potentially weakening the victims' access to justice. 
• Deletion of the obligation to provide representative mechanisms: This proposal will make it more challenging for victims with limited resources or collective claims to be represented by NGOs, trade unions, or national human rights institutions. This change can hinder the ability of affected parties to seek redress.

Stakeholder perspectives on the EU Omnibus Package: A complex balancing act  

The Omnibus Package has generated diverse reactions across the EU business and sustainability sectors, revealing tensions between economic priorities and sustainability commitments. 

Some industry supporters welcome the simplifications as necessary relief from regulatory burden, particularly for SMEs, arguing that these changes will foster growth and innovation by reducing compliance costs. 

At the same time, compliant companies fear disruption to established sustainability processes and inconsistent reporting requirements that could affect market competitiveness and undermine the intended level playing field.

Many civil society organisations express concern that the package undermines the European Green Deal's objectives. They argue that the Commission is effectively deregulating rather than simplifying, creating regulatory uncertainty that could delay sustainability investments and force businesses to navigate inconsistent liability rules across member states. 

Member States remain divided on the proposal, with positions largely reflecting national economic and environmental priorities. 

The Commission's fast-track approach has intensified discussions, with the legislative process expected to involve significant negotiation as the EU attempts to balance economic competitiveness with environmental leadership.

The legislative road ahead for the Omnibus Package

On March 20, 2025, the European Council urged EU institutions to expedite the Omnibus simplification packages for completion in 2025, requesting co-legislators to adopt the proposal by June 2025. 

On April 3, 2025, the European Parliament approved the EU Commission's "Stop-the-clock" Directive, part of the first Omnibus Package, which delays the implementation of key corporate sustainability reporting and due diligence requirements. This decision follows a fast-tracked procedure, where the EU Parliament bypassed committee discussions and directly voted on the proposal during its plenary session.

Key changes introduced by the "Stop-the-clock" Directive:

1. Corporate Sustainability Reporting Directive:
   Reporting requirements for companies in the second and third waves (those originally required to report in 2026 and 2027) will now be postponed by two years.
2. Corporate Sustainability Due Diligence Directive:

• Member States now have until 26 July 2027 to transpose the CSDDD into national law, a one-year extension.
• The largest companies (EU firms with over 5,000 employees and €1.5 billion in turnover, or non-EU firms with equivalent EU turnover) will have until 26 July 2028 to comply with due diligence requirements.
• Deadlines for second-wave companies (EU firms with over 3,000 employees and €900 million turnover, or non-EU firms with equivalent EU turnover) remain unchanged at 26 July 2028.

What happens next?

The Stop-the-clock Directive now awaits formal approval by the EU Council. Once approved, it will be published in the Official Journal and come into force the following day. Member States will have until 31 December 2025 to incorporate the directive into their national laws.

Attention will soon shift to another proposal in the Omnibus Package, the "Content Directive," which aims to introduce more substantive changes to the CSRD and CSDDD. However, no timetable for its discussion has been set.