Just two days after the European Commission unveiled its controversial Omnibus proposal, ECCJ with Frank Bold, World Benchmarking Alliance, WWF and ShareAction gathered experts to dissect its implications for EU corporate sustainability laws. The discussion could not have been more urgent—the proposal threatens to gut the Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD), and the EU Taxonomy, three pillars of corporate accountability and sustainable finance in the EU. 

Branded as a “simplification” effort, the Omnibus proposal is, in reality, full-scale deregulation designed to dismantle corporate accountability. It strips away key obligations for companies to prevent human rights abuses, weakens climate transition plans, and undermines reporting rules meant to ensure transparency. From the moment the Omnibus process was announced, concerns about its lack of transparency, rushed timeline, and exclusion of civil society have dominated the debate. Our webinar brought together leading voices and over 2,000 participants to unveil these changes—what they mean for corporate accountability, sustainable finance, and reporting obligations—and to discuss what’s at stake if the EU backtracks on its commitments to sustainability and the Green Deal. 

• The webinar recording  is available here.

• The presentation slides are here.

Instead of simplifying EU sustainability rules, the Omnibus proposal undermines their effectiveness, shielding companies from responsibility while leaving affected communities and workers unprotected. Limiting obligations to direct suppliers would shift the burden of enforcement onto NGOs and journalists, while watering down climate transition plans would let corporations greenwash without consequences. The removal of civil liability and penalties further weakens enforcement, turning the CSDDD into a symbolic piece of legislation rather than a meaningful instrument for accountability. Instead of “simplifying” sustainability laws, the EU is creating legal uncertainty, encouraging a race to the bottom, and undermining its own Green Deal commitments.

1. Value chain obligations: limited scope, limited impact

The revised EU rules drastically weaken corporate due diligence by limiting obligations to direct suppliers (Tier 1). This tiered due diligence approach has already led to issues in implementation in Germany, as companies send out mass questionnaires to their direct suppliers instead of taking a risk-based approach and looking deeper into the supply chain where the actual risks lie and where due diligence could have the greatest impact. Instead of strengthening corporate responsibility, the proposal would amount to shifting the responsibility for enforcement beyond Tier 1 onto NGOs and media, making them de facto watchdogs who must investigate abuses themselves. 

The proposed Omnibus legal framework is also riddled with potential for loopholes and skirting of obligations. Companies are no longer required to monitor risks in real time, making due diligence a one-off exercise every half decade rather than a continuous improvement process. Ambiguous terms such as “plausible information” further weaken legal certainty, opening the door to corporate inaction. 

Originally, the CSDDD was meant to set a minimum standard for responsible business practices, allowing Member States to go further if they chose. However, the new proposal flips this principle on its head, creating a legal ceiling that caps obligations below existing international standards such as the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines. Instead of pushing companies toward stronger accountability, the EU risks lowering the bar for corporate due diligence, making compliance little more than a procedural checkbox rather than a real tool for preventing harm. 

2. Climate transition plans: from action to paperwork

The Omnibus proposal to scrap the obligation to “put into effect” the climate transition plans would strip them of any effectiveness and turn them into little more than a greenwashing bureaucratic exercise. Companies would simply be required to draft plans without actually ever being expected to implement them. This creates a dangerous loophole, allowing corporations to give the appearance complaint without actually making real progress on emissions reduction. The proposed change also would also contradict existing EU climate law, which mandates both adoption and implementation of transition plans. Without enforcement, the EU risks letting corporate climate commitments become empty promises rather than concrete steps toward net-zero, while also making it harder for regulators and stakeholders to challenge corporate inaction around the climate crisis.  

3. Penalties & enforcement: a weakened accountability framework 

The proposed changes on civil liability and administrative penalties would severely weaken the enforcement framework of the CSDDD, undermining its original goal of setting mandatory due diligence obligations. Unlike existing voluntary standards—which have repeatedly failed to prevent corporate abuse— the CSDDD was meant to create tangible legal consequences for companies that harm human rights and the environment.

The removal of the obligation for EU Member States to provide civil liability mechanisms means that victims would have relied on a fragmented patchwork of national tort laws, many of which have historically failed to hold corporations accountable. To make matters worse, the deletion of representative mechanisms would make it harder for victims with limited resources to seek justice. Without the ability to be represented by NGOs, trade unions, or human rights institutions, many will be effectively shut out of the legal process.

Financial penalties have also been significantly weakened. Unlike the GDPR, where fines are based on a company’s global turnover, the new proposal removes this standard, allowing penalties to be calculated on a much smaller scale. These risks reinforcing a “cost of doing business” mentality, where wealthy multinationals knowingly break the law because the financial gains outweigh the potential fines. Adding to the problem, Member States are given broad discretion to set their own penalty limits, increasing the risk of regulatory dumping —where countries compete to offer weaker enforcement to attract business. 

Instead of simplifying compliance, this deregulation would create fragmentation and legal uncertainty across the EU. A patchwork of national enforcement rules would, if anything, make it more uncertain whether a given company could be held liable for a given impact, contradicting the Directive’s core purpose of harmonizing corporate due diligence standards Member States.

These rollbacks would set EU standards for human rights and environmental due diligence below existing voluntary frameworks like the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines, reducing the CSDDD to a symbolic piece of paper rather than a real tool for corporate responsibility.

For more takeaways on the webinar “EU Omnibus Unveiled. What’s at stake for the EU sustainability framework”, check out Frank Bold’s article.

The Omnibus proposal now moves to the European Parliament and Council, where both institutions must form their positions before entering negotiations. But this is no ordinary legislative process. From the start, the Commission has taken an unprecedented and deeply flawed approach—rushing the proposal forward without proper consultation, transparency, or impact assessment.

The political landscape is also shifting. While the Council may move swiftly to secure an agreement, the European Parliament—following the upcoming elections—will be a battleground. With unpredictable majorities and the risk of a more conservative bloc aligning to weaken corporate accountability, the fate of the CSDDD and other key sustainability laws hangs in the balance.

One thing is certain: this fight is far from over. We will continue pushing back against this deregulation agenda. The EU has a choice—stand by its commitments to human rights and climate action, or cave to corporate pressure at the expense of people and the planet.