Corporate Governance | Business | Legislation

The Omnibus Simplification Push

In February 2025, the European Commission launched an “Omnibus” simplification package intended to ease regulatory burdens—targeting key ESG frameworks like the Corporate Sustainability Due Diligence Directive (CSDDD), Corporate Sustainability Reporting Directive (CSRD), and Taxonomy Regulation (corporatejustice.org).

While framed as cutting bureaucracy, critics argue the measures amount to deregulation, threatening hard-won corporate accountability standards (business-humanrights.org).

Key Rollbacks: What’s at Stake

• Raised thresholds & narrower scope: Due diligence now only required for companies with >1,000 employees and €450 million turnover—far above the original 50-employee threshold—and obligations narrowed to direct suppliers only (walkfree.org).
• Civil liability removed: Victims lose enforceable rights; NGOs no longer able to litigate on their behalf (walkfree.org).
• Due diligence frequency reduced: Obligations to monitor risk are extended from annually to once every five years—diluting responsiveness to human rights or environmental harms (walkfree.org).
• Climate plan implementability lost: Requirement to implement climate transition plans removed—companies only need to draft them, not act on them (reuters.com).

Consequences for Corporate Accountability

Shielding Abusive Supply Chains

By limiting responsibility to first-tier suppliers and eliminating follow-on liability, chains of responsibility fracture—leaving gaps where abuses can go unaddressed (earthsight.org.uk).

Impaired Access to Justice

With no legal liability or NGO standing, victims are deprived of meaningful pathways for redress .

Legal Fragmentation Risk

Rolling these measures into national law may result in inconsistent standards across Member States, undermining harmonisation goals (earthsight.org.uk).

Reputational & Litigious Fallout

Scholars warn that weakening binding standards likely increases climate litigation—as stakeholders seek remedies in courts rather than paperwork compliance .

Stakeholder Reactions

• Civil society & NGOs: Alarmed, calling the package a “full‑scale deregulation” that could “institutionalise complicity” in rights abuses (bhrrc.org).
• Legal academics: Warn businesses may see a compliance façade followed by lawsuits, as disclosed transition plans go unimplemented (reuters.com).
• Industry groups: View the rollbacks as essential relief from EU red tape, though larger firms remain unsatisfied (reuters.com).

What Legal Advisors Should Prioritise

1. Monitoring the process: The Omnibus package must pass through Parliament and Council—stopping it requires strategic engagement .

2. Litigation trends rising: Reduced legal obligations may correlate with increased climate or human rights litigation by civil society.

3. Evaluate corporate contracts: Advising clients to voluntarily extend due diligence beyond minimum thresholds can maintain global standards and mitigate litigation risk.

4. National-level strategies: Companies should track divergent implementation standards to anticipate liability and reputational exposure.

Conclusion: A Critical Juncture for EU Corporate Accountability

The Commission’s Omnibus simplification package reconfigures the EU’s corporate accountability architecture—scaling back ESG obligations in pursuit of competitiveness and reduced red tape. Yet these rollbacks carry significant risks:

• Erosion of scope and enforcement: Broad exemptions, scaled-back due diligence, and the removal of civil liability and stakeholder representation threaten to hollow out the CSDDD’s enforcement capabilities (walkfree.org).
• Fragmentation over harmonization: With access to justice decentralized and penalty levels left to member-state discretion, the EU may see a patchwork of inconsistent, weaker standards—embers in previously unified protections .
• Reputational and regulatory uncertainty: Multinationals like Nestlé and Unilever warn that these swings risk destabilizing ESG strategies, undercutting investment planning, and damaging Europe’s sustainability leadership (rsm.global).
• Civil-society backlash: Over 360 NGOs and trade unions, along with watchdogs like ECCJ and FIDH, argue the Omnibus delivers “full‑scale deregulation” that prioritizes corporate profits over human rights, climate goals, and democratic accountability (fidh.org).

Final Thoughts: Why This Matters Now

If enacted in its current form, the Omnibus would:

• Fracture EU harmonization, inviting forum-shopping and weakening supranational accountability.
• Undermine the very reasons ESG reporting was built—to embed sustainability into business practice, not merely paper compliance.
• Expose companies to stakeholder litigation and reputational risks as voluntary action falls short.

To preserve rigor and integrity, legislators and advisors must act decisively:

1. Reinstate key measures—including enforceable civil liability, stakeholder mechanisms, and climate‑plan implementation.
2. Restore unified minimum thresholds across member states to safeguard harmonization.
3. Demand robust impact assessments and inclusive consultations to guide law-making and maintain democratic legitimacy.

The Omnibus moment is a pivot point: Europe must decide whether it will uphold its global ESG leadership or pivot towards deregulation. For legal advisors, advocates, and policy-makers, this is a pivotal moment to define the EU’s trajectory on corporate accountability.