News / EC hails Omnibus ESG package – but critics say it sends wrong message

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The European Commission (EC) has hailed its Omnibus I simplification package as “a significant step forward in relieving companies from administrative burden”, but the watered-down initiative risks putting human rights and sustainability on the back-burner.  

At the heart of the updated Omnibus I package are amendments to the Corporate Sustainability Reporting (CSRD) and Corporate Sustainability Due Diligence (CSDDD) directives. 

The CSRD requires large companies to publicly report detailed information on their environmental, social and governance (ESG) impacts, while the CSDDD asks them to identify, prevent, and address human rights and environmental risks throughout their supply chains. 

Agreement to reduce the scope of the requirements was reached this week bb the European Parliament and member states.  

Omnibus I is mandatory for companies with more than 5,000 employees and €1.5bn in annual turnover worldwide, as well as non-EU companies with over €1.5bn in turnover within the EU. The rules will be delayed by a year, coming into force from July 2029. 

Originally the directive stated that EU companies with more than 1,000 employees and over €450mn in annual turnover would have to comply, as well as non-EU companies with more than €450mn of turnover in the EU.  

The update has also erased the need for companies to draft mandatory climate transition plans in line with attempts to limit the global temperature increase to 1.5ºC, as set out in the 2015 Paris Agreement.  

For many firms, the changes are expected to remove full reporting obligations altogether. For companies still in scope, the package promises greater flexibility, streamlined disclosure requirements, and protection from excessive information demands from larger customers further up the chain. 

“All designed to ease business operations while upholding the original policy objectives of the directives,” assured the EC, which argued the reforms aligned with its wider push to cut administrative burdens by 25% overall and 35% for SMEs, a target it said could unlock billions in investment capacity. 

“The changes to the CSDDD eliminate unnecessary complexities and ultimately reduce compliance burden while preserving the directive’s goals to reduce adverse environmental and human rights impacts, including in global value chains of large companies active in the EU, and advance the sustainability transition of our economies,” it said.  

However, not everyone is convinced that the watered-down measures are fit for purpose. Anti-Slavery International told The Loadstar it was “deeply disappointed” with the Omnibus proposal.  

“This is a serious setback in the fight against forced labour, and lets down workers around the world. By dismantling key protections in the CSDDD, it sends a dangerous signal to the world that corporate interests take precedence over human rights,” it said. 

The move follows a series of simplification initiatives introduced since the start of the commission’s mandate, including the adoption earlier this year of a “Stop-the-Clock” mechanism that delayed CSRD and CSDDD deadlines by up to two years for many companies. 

The provisional deal must now be formally approved by both the European Parliament and European Council. Once adopted, the amendments will be published in the EU’s Official Journal and take effect immediately.