01/07/2025
The Council of the EU has formally adopted its position on the omnibus package, and the news is troubling for advocates of responsible business conduct. In a move that significantly waters down previous ambitions, the Council’s position—approved by Coreper—marks a clear step backwards compared to the Commission’s original proposals, particularly on the Corporate Sustainability Due Diligence Directive (CSDDD).
What’s in? Fewer companies, weaker obligations, and more time to comply.
What’s out? Much of the ambition that once made Europe a global frontrunner on responsible business conduct.
The omnibus package fits into a wider deregulatory push that some argue could ultimately backfire. As Professor Alberto Alemanno warns in his recent op-ed, rolling back EU sustainability regulations risks not only damaging the EU’s green credibility but also weakening long-term competitiveness by creating fragmented, short-termist rules that fail to meet global expectations.
Weakened Thresholds, Weakened Impact
In the Council position, the most glaring rollback is on scope. The Corporate Sustainability Reporting Directive (CSRD) will now apply only to companies with over 1,000 employees and a €450 million turnover, excluding many from sustainability reporting obligations. Even more concerning is the new CSDDD threshold: 5,000 employees and €1.5 billion in turnover. This drastically limits the number of companies required to implement due diligence processes, undermining the directive’s very purpose.
Risk-Based Approach Falls Short
While the Council claims to shift toward a risk-based approach, this version introduces serious limitations. Companies would only need to investigate adverse impacts where “objective and verifiable information” suggests issues beyond their direct business partners, raising practical concerns about enforceability and oversight.
The Council also waters down obligations around climate transition plans. Rather than mandating effective implementation, companies are now only required to outline planned actions, delaying real accountability. On top of this, adoption of these plans has been postponed by two years, sending the wrong signal in the face of the climate crisis.
Legal Uncertainty and Litigation Risks
A legal analysis by ClientEarth warns that the Omnibus Directive could face legal challenges on multiple grounds, including breaches of the principles of proportionality, legal certainty, and coherence. The analysis also highlights how the proposed changes may undermine Charter rights and the EU’s climate obligations, and identifies a worrying lack of impact assessment. In particular, the narrowing of due diligence to only direct suppliers and the softening of climate plan requirements may significantly weaken the EU’s ability to meet its environmental and human rights objectives, exposing the package to litigation risks before both national courts and the European Court of Justice.
What’s Next?
Adding to the delays, the Council proposes pushing the CSDDD transposition deadline to 26 July 2028, giving companies more time, but weakening the EU’s leadership on corporate sustainability.
While the Council’s position may appeal to corporate lobbyists, it undermines the EU’s credibility as a global leader on sustainable business. As trilogue talks loom, all eyes are now on the Parliament to hold the line.