On 26 February 2025, the European Commission published two of the three omnibus packages. The first omnibus package concerns amendments to the CSDDD (Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859), the CSRD (Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting) and the EU Taxonomy Regulation (Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088). The proposed amendments include relief for numerous companies and an alignment of the scope of application of the CSDDD, the CSRD and the EU Taxonomy Regulation, in that only companies with more than 1,000 employees are covered by the respective legal acts but still with different requirements as to the net-turnover. Contrary to previous expectations, the Commission is now also proposing changes to the content of the CSDDD's due diligence obligations.

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1. Context

Discussions on simplification and standardization of the CSDDD, CSRD and EU Taxonomy Regulation began immediately after a report by Mr Draghi on European competitiveness in September 2024. Commission President von der Leyen publicly put the issue on the agenda in Budapest in November 2024. When the European Commission's work program became known, it emerged that the amendments to the CSDDD, CSRD and EU Taxonomy Regulation were to be combined in a so-called "omnibus act", but that two further omnibus packages would also be developed. In addition to the sustainability omnibus, an investment omnibus package was published on 26 February 2025. A third omnibus package for more paperless trading and a new "mid-caps" category, which is intended to ease the burden on SMEs in particular, is to be published by the middle of the year. At the same time as facilitating the omnibus packages, the European Commission published the Clean Industrial Deal.

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2. Proposed Amendments to the CSDDD

The planned changes to the CSDDD relate in particular to the content of the due diligence obligations. Adjustments are to be made to the scope and frequency of the risk analysis, while the group of stakeholders to be involved is to be restricted. The need to terminate business relationships in the event of unsuccessful remedial and risk minimization measures will also be loosened. In addition, civil liability under the CSDDD is largely abolished. In many respects, the CSDDD thus approximates the German Supply Chain Due Diligence Act (LkSG):

The scope of application of the CSDDD remains unaffected – at the last stage, companies with more than 1,000 employees and a net turnover of more than EUR 450 million will be affected by the CSDDD regulations by 26 July 2029 (for large companies from 26 July 2028). The scope of protected human and environmental rights also remains unaltered.

According to the omnibus proposals, the risk analysis should only be carried out by obligated companies for direct suppliers (Tier 1) every five years. This could remove a central component of the CSDDD – the performance of an annual tier-n related risk analysis. In addition, only information from those direct suppliers that employ more than 500 employees should be requested as part of the risk analysis. This is intended to protect small and medium-sized companies from extensive requests for information from their customers subject to CSDDD. Similar to the LkSG, risk assessments are to be carried out and further measures taken if plausible information on possible legal violations against indirect suppliers is available.

The definition and thus the involvement of stakeholders is also to be limited. Consumers and individual employees have been removed and replaced by legitimate representatives of the labour force or associations and companies that are directly affected by the violations. In particular, stakeholders are no longer to be involved in monitoring the implementation of due diligence obligations or in the implementation of remedial measures.  

However, it remains possible for civil society organizations and employee representatives to submit complaints to companies in relation to human rights or environmental risks remains. Appropriate complaints procedures must be in place and made accessible to these stakeholders. The means of raising complaints by civil society organizations, which is actively used under the German LkSG, is therefore retained.  

As part of the prevention and remedial measures, the need to terminate business relationships has largely been cancelled. Instead, companies should draw up and implement an enhanced prevention action plan. As long as there is a reasonable expectation that the enhanced prevention action plan will be successful, the mere fact that the co-operation with the business partner is continued should not trigger any liability on the part of the company.

Changes were also proposed in particular with regard to civil liability. This is to be largely deleted from the CSDDD; the CSDDD is to refer to the national provisions in this regard.  

According to the omnibus proposals, a climate protection plan should now only be adopted, but not implemented on a mandatory basis. However, the climate transition plan should describe implementation measures.

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3. Proposed amendments CSRD

The scope of application of the CSRD is now to be adapted to that of the CSDDD with regard to the number of employees. Only companies that employ more than 1,000 employees in addition to the already known turnover threshold (balance sheet total of EUR 25 million or net turnover of EUR 50 million) will be affected by the reporting obligations under the CSRD. For companies that no longer fall under the scope of the CSRD (up to 1,000 employees), the Commission will introduce a voluntary reporting standard based on the standard for SMEs developed by EFRAG by means of a delegated act. In addition, companies are to be given more time and the reporting obligation is to be postponed by two years. The obligated companies are to report on 2026 for the first time in 2027. It has also been announced that the ESRS data points will be reduced - although the extent of this will only be proposed by the European Commission at a later date. It is already clear that the proposal will include the authorization for the Commission to adopt sector-specific standards.

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4. Proposed amendments to the EU Taxonomy Regulation

According to the EU Taxonomy Regulation, financial market participants must currently report on the proportion of their sustainable investments. For companies that fall within the future scope of the CSRD (large companies with more than 1,000 employees) and have a net turnover of up to EUR 450 million, the omnibus proposal provides for voluntary taxonomy reporting. For companies that are no longer subject to this obligation, the following applies: if they wish to refer to sustainable turnover, they will continue to be subject to the reporting obligation.

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5. Outlook

The European Commission's proposals on the omnibus packages must now be adopted by the European Parliament and the Council of the European Union. The amended directives (in particular the CSDDD and CSRD) must then be transposed into national law. The implementation deadline for the CSRD is 31 December 2025 and for the CSDDD 26 July 2027, meaning that companies subject to obligations under the LkSG will remain subject to the obligations set out therein for the time being. If the European Commission prevails with its omnibus proposals, the changes to the LkSG are likely to be smaller than originally expected. It can also be assumed that the German legislator will wait for the amendments to the CSRD to come into force before discussing and adopting the CSRD Implementation Act, which has not yet been passed.