Authors
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Associate, Transformation, BSR
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Director, Human Rights Standards, BSR
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Associate Director, Transformation, BSR
Last November, the EU Commission President, Ursula von der Leyen, announced plans to create an Omnibus Simplification Package that would streamline reporting requirements in three EU Green Deal laws: the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CSDDD). These rules have been designed to complement each other:
- In force since 2020, the EU Taxonomy establishes a classification system for environmentally sustainable business activities, including screening criteria for their contribution to environmental objectives and minimum social safeguards that must be met.
- In force from January 2023, companies must report on their material impacts, risks, and opportunities in line with the European Sustainability Reporting Standards (ESRS), with the largest in-scope companies reporting in 2025. Companies have an obligation to report their Taxonomy-aligned activities in their management report.
- The CSDDD, in force in 2024, requires companies to conduct human rights and environmental due diligence, adopt Climate Transition Plans, and report on their adverse impacts on people and the environment and how they are managed. CSDDD does not impose additional reporting requirements—companies may report on their adverse impacts under CSDDD in their CSRD management reports without having to issue a separate CSDDD report.
EU discussions on the Omnibus are ongoing, with the draft proposal expected in late February 2025.
A leaked document indicates that on January 29, the EU will release details on the Omnibus proposal as part of its “competitiveness compass” report. Key areas for attention include focusing on the “most harmful activities”, ensuring alignment of data requirements and investor needs, and “proportionate” timelines. Once the Commission approves the language, it will be subject to debate within the European Parliament and Council.
The Omnibus announcement follows “big narrative” calls from business to reduce red tape and support competitiveness, as well as genuine questions and concerns from companies seeking to comply, such as the need for more guidance on certain CSDDD provisions. Opponents of the European Green Deal have mounted pressure campaigns to weaken the rules, including by reducing obligations and the scope of companies covered.
While effective interoperability and avoiding overlapping reporting requirements is beneficial, the possibility of reopening the legal text at this late stage has led to widespread concern among business leaders and civil society. For instance, re-opening negotiations could weaken key elements of alignment with the OECD Guidelines on Multinational Enterprises and the UN Guiding Principles on Business and Human Rights (UNGPs), which are essential for preserving the balance between feasibility and achieving sustainability impacts.
This would undermine significant business support for CSDDD and CSRD and may obstruct and negate progress made by business, including investments of time and money to build out their compliance infrastructure.
In January 2025, Nestle, Mars, Unilever, Primark, Ferrero, and others sent a letter to the European Commission, raising concerns that the forthcoming Omnibus package might dilute the new regulations, particularly the CSDDD, and jeopardize business certainty and investment. Earlier, over 400 French companies, including L’Oreal, Carrefour, and Amundi, argued that complaints that CSRD, CSDDD, and the Taxonomy hurt European competitiveness are overblown and are made by parties that haven’t closely examined the text.
Abruptly transforming “simplification” into “deregulation” risks creating unintended consequences for business, not to mention for people and the planet. Instead of changing what has yet to take place, greater value lies in assessing achievements and challenges after implementing the current rules in their entirety and, if necessary, making reforms at a later stage. To support companies, the EU Commission should adopt the necessary delegated acts and guidelines to provide greater clarity and enhance the practicality of existing measures while considering the needs and questions of business.
As the world waits to see the Omnibus proposal, companies are encouraged to proceed based on the existing legal text, including by aligning their compliance efforts with international due diligence and reporting standards and pursuing their ambitions for business transformation.
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