ETI responds to the EU Commission’s Omnibus proposal

European flags in front of the Berlaymont building, headquarters of the European Commission in Brussels, Belgium. Photo credit: Shutterstock.

ETI urges European legislators to uphold the core principles of the Corporate Sustainability Due Diligence Directive (CSDDD) and Corporate Sustainability Reporting Directive (CSRD).

As a leading alliance of NGOs, trade unions and companies working to advance
human rights in global supply chains, ETI is deeply concerned with the EU Commission’s Omnibus proposal - aimed at ‘simplifying’ the CSDDD, CSRD and EU Taxonomy Regulation.

Prior to the Omnibus proposal, this suite of sustainability laws presented significant steps forward for human rights and environmental due diligence and reporting across the bloc, and beyond. Today, the Omnibus proposed includes significant reductions in the scale and scope of CSDDD and CSRD. These changes delay necessary progress for workers and rightsholders worldwide and limit the potential for accountability on human rights and the environment. By rewriting these laws, the proposed Omnibus also fails to create a level playing field for business and risks driving further confusion for companies working to act responsibly.

“The proposed Omnibus risks undermining years of progress by policymakers, civil society, trade unions, and responsible business. These groundbreaking EU sustainability laws should be protected, ensuring legal protections for workers and rightsholders, establishing a level playing field for responsible business and driving sustainable development for people and planet, not storing up more problems for the future”.

Giles Bolton, Executive Director

What are the proposed changes?

CSDDD

Explore proposed changes to the Corporate Sustainability Due Diligence Directive.

The Omnibus proposal indicates primary due diligence will only focus on tier one suppliers, a major reduction from its original requirement encompassing the whole value chain. This is a major concern because the most egregious human rights abuses are often found in the lower, less visible tiers of supply chains.

The definition of ‘stakeholder’ would also be reduced by limiting it to workers and their representatives, and to individuals and communities whose rights or interests are or could be ‘directly’ affected by the company, its subsidiaries and its business partners. While it is realistic that not every stakeholder can always be engaged at length, this threatens a wider understanding of human rights impacts and the previous draft gave sufficient flexibility to ensure this could be proportionate to the salience and complexity of the issues.

On disengagement, the proposal removes the duty to terminate business relationships in cases of actual and potential adverse impacts. Rather, once the due diligence measures have been exhausted, a company would only be required to suspend, and not terminate, the business relationship.

The proposal also limits enforcement by removing the specific EU-wide liability regime under CSDDD, leaving decisions on potential civil liability up to individual member states. Member states may also no longer be required to allow NGOs and trade unions to bring representative actions on behalf of complainants (although they may provide for this possibility). This change could lead to risks of ‘forum shopping’,
with defendants pursuing jurisdictions where penalties are less strict to reduce potential exposure.

Of particular concern is that the proposal suggests that in-scope businesses would be required to assess the adequacy and effectiveness of due diligence measures every five years, instead of every year as per the original text of CSDDD. The reality is that human rights risks and abuses can develop in much shorter timeframes.

Lastly, the Commission proposes to delay application for the first companies due to report from mid-2027 to mid-2028; a delay that is unnecessary given this requirement has been flagged for several years now, and mid-2027 is plenty of notice.

CSRD

Explore proposed changes to the Corporate Sustainability Reporting Directive.

The proposal reduces the number of companies in scope to include only those with over 1000 employees and either a turnover above EUR 50 million or a balance sheet above EUR 25 million. This means 80% of companies originally in scope would
no longer be required to report under the Directive. This damages the level playing field for businesses.

For smaller businesses, the Commission proposes a proportionate standard for voluntary use which would be based on the Voluntary Sustainability Reporting Standards for SMEs (VSME) developed by EFRAG. There would be no sector-specific reporting standards. Further, in-scope companies would only be able to request information that is specified in the VSME from smaller entities as part of the value
chain mapping.

The last group of companies that were originally required to start complying with CSRD in 2026, will now only have to do it in the financial year 2028; this is to ensure there is enough time to determine whether they will have to report against CSRD at all.

EU Taxonomy

Explore proposed changes to EU Taxonomy.

According to the proposal, the reporting obligations of the EU Taxonomy would now be voluntary for companies with less than 1000 employees. A 70% reduction in data points to report against has also been suggested.

The proposal will now go for consultation at the EU Parliament and Council. ETI continues to urge decision makers at both levels to retain the scope and ambition of CSDDD and CSRD. At a time of widespread cuts to global aid budgets, businesses become even more important partners to ensure that global commitments on human rights and environmental sustainability can be met. This puts even more pressure on responsible businesses already leading in this space, to carry the load.

What does this mean at ETI?

ETI and its member commitments to human rights due diligence and transparent public reporting remain steadfast. We will continue to drive multistakeholder collaboration to address the human rights impacts of business and climate change on workers in supply chains worldwide. While the changes proposed to EU laws require fewer companies to conduct due diligence with direct suppliers, broader expectations on responsible business remain clear, as set out by the UNGPs and OECD Guidelines. Businesses have a responsibility to respect human rights, prevent against adverse impacts and provide remedy where harm occurs, irrespective of legislative setbacks this remains paramount.

ETI company member responsibilities will continue to align with these frameworks
and progress on human rights due diligence, meaningful stakeholder engagement
and just transitions, in line with our ETI Member Charter and Corporate
Transparency Framework.

As legislation evolves, ETI will continue to support companies to understand these changes and prepare for them. Our approach will continue to align with established international frameworks, and we will continue to advocate for mandatory legislation that does the same.

What does this mean for the business and human rights movement?

Deregulation at the EU level will be detrimental to the progress on human rights and climate goals that is so urgently needed.

These changes risk depriortisation of human rights and environmental due diligence by organisations no longer in scope. With governments stepping back, it’s more important than ever that businesses, trade unions and NGOs work together to achieve high standards, improve working conditions and drive responsible business worldwide.

At ETI, we will continue working with companies, NGOs and trade unions, to ensure those businesses committed to human rights, are supported to address their business impacts through robust human rights due diligence, meaningful stakeholder engagement and credible multistakeholder collaboration.