The European Commission’s Omnibus Package: Key Revisions to Sustainability Reporting, Due Diligence, and Liability Frameworks

In one of the most consequential regulatory recalibrations in recent years, the European Commission has unveiled its Omnibus package, proposing significant revisions to key elements of the EU’s sustainability regulatory framework. Announced on February 26, 2025, the package reflects a concerted effort to address concerns regarding compliance burdens under the Corporate Sustainability Reporting Directive (“CSRD”), Corporate Sustainability Due Diligence Directive (“CSDDD”), the EU Taxonomy Regulation, and the Carbon Border Adjustment Mechanism (“CBAM”). 

At its core, the Omnibus package does not signal a retreat from the European Union’s broader ESG commitments; rather, it represents an effort to further refine the regulatory framework, affording companies additional flexibility while preserving the fundamental objectives of corporate transparency, sustainability, and responsible business conduct that characterize the EU’s approach to lawmaking in this area. 

The proposed modifications—most notably those concerning the scope of the CSRD, the deferral of implementation deadlines, the simplification of due diligence requirements, and the revision of civil liability provisions—carry far-reaching implications for compliance professionals, necessitating a strategic reassessment of corporate sustainability programs to ensure continued alignment with evolving regulatory expectations.

 

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Implications of the Omnibus on CSRD

A critical aspect of the Omnibus package is the proposal to narrow the scope of the CSRD, a measure designed to limit the number of companies subject to mandatory sustainability disclosures under the directive. The original CSRD framework, which imposed broad reporting obligations on entities meeting at least two of three size-based criteria (250 employees, €40 million in turnover, or €20 million in assets), has been revised to apply only to companies exceeding 1,000 employees. 

This shift exempts a substantial portion of previously covered entities, significantly reducing the administrative burden on mid-sized enterprises that had been grappling with the complexities of reporting under the European Sustainability Reporting Standards (“ESRS”). 

While this modification alleviates compliance obligations for some, it raises critical strategic considerations for organizations operating in industries where sustainability transparency is an investor expectation rather than merely a legal requirement. Many companies that may no longer fall within the revised scope of the CSRD may nonetheless determine that continued voluntary adherence to ESG disclosure standards remains prudent to meet stakeholder demands, mitigate reputational risk, and ensure future regulatory preparedness.

Timeline Adjustments

Beyond the modification of CSRD’s applicability, the Omnibus package introduces a structured deferral of implementation deadlines, affording affected entities additional time to comply with both reporting and due diligence mandates.

The second and third waves of CSRD-reporting companies—originally slated for phased compliance—will now benefit from an extended two-year grace period, providing a longer runway to establish internal reporting mechanisms and adapt financial and operational structures to sustainability disclosure expectations. Likewise, the CSDDD’s applicability is postponed by one year, shifting its effective date to mid-2028. 

The significance of this deferral cannot be overstated, particularly for multinational enterprises (“MNEs”) with complex supply chains that have struggled to implement the exhaustive due diligence protocols required under the directive’s original formulation.

While the deferral provides additional time for compliance readiness, it does not diminish the long-term expectation that companies will implement rigorous due diligence practices to identify, mitigate, and remedy adverse human rights and environmental impacts across their supply chains.

Simplification on CSDDD Due Diligence Requirements

Perhaps the most substantive revision contained within the Omnibus package concerns the simplification of due diligence requirements under the CSDDD. One of the most controversial aspects of the original directive was the imposition of extensive obligations requiring companies to monitor and enforce responsible business conduct across their entire supply chains, including indirect suppliers and subcontractors. 

The proposed Omnibus package narrowly tailors these obligations, refocusing due diligence primarily on direct suppliers, thereby significantly reducing the regulatory scope of required monitoring efforts. In addition, the frequency of mandated assessments has been reduced from annual reviews to once every five years, providing affected entities with a more manageable compliance timeline while still maintaining a baseline obligation to monitor and address supply chain risks. 

While these changes mitigate some of the operational burdens companies faced under the original CSDDD framework, compliance professionals must remain cognizant of the broader international expectations for supply chain due diligence—particularly under regimes such as Germany’s Lieferkettensorgfaltspflichtengesetz (“LkSG”) and France’s Duty of Vigilance Law, both of which continue to impose stricter oversight obligations than the EU’s revised directive.

Civil Liability Provisions

In addition to modifying reporting and due diligence parameters, the Omnibus package introduces fundamental revisions to the civil liability provisions associated with sustainability-related non-compliance. Under the original CSDDD framework, companies were subject to a harmonized liability regime, which uniformly imposed obligations across EU Member States, exposing businesses to significant liability risks for failures to prevent human rights abuses or environmental harm within their supply chains, even where violations were committed by third-party suppliers with no direct contractual relationship to the covered entity. 

The proposed amendments eliminate this harmonized treatment, instead deferring to Member States to establish their own civil liability frameworks, thereby introducing jurisdictional variability in enforcement. While this shift may alleviate certain cross-border compliance challenges, it introduces a fragmented liability landscape that could create further uncertainty for multinational enterprises operating across multiple EU jurisdictions. 

The revision represents an effort to grant Member States greater discretion in the enforcement of corporate responsibility mandates, reflecting broader concerns regarding the practical realities of implementing a uniform liability structure across diverse legal systems. 

Considerations for Compliance Teams

Collectively, these—and other—revisions to the EU’s sustainability regulatory framework demand a proactive response from compliance professionals, requiring a comprehensive reassessment of existing policies and procedures to ensure continued adherence to both revised legal mandates and broader ESG best practices. 

Organizations must take a measured approach to evaluating the impact of these changes, recognizing that while regulatory obligations may evolve, the expectations of investors, consumers, and global stakeholders remain steadfast in demanding corporate accountability in sustainability matters.

Specifically, companies should critically assess their current reporting frameworks to determine whether voluntary adherence to the CSRD remains a strategic necessity, even if their operations are no longer legally required to comply. 

Similarly, businesses should revisit their due diligence policies in light of the revised CSDDD requirements, ensuring that while compliance burdens are reduced, the integrity of supply chain oversight mechanisms remains intact. Finally, compliance teams must remain vigilant in monitoring ongoing legislative developments, as the Omnibus package is expected to undergo further refinements as it progresses through the EU legislative process.

Conclusion

At its core, the European Commission’s proposed Omnibus package reflects a deliberate recalibration rather than a fundamental departure from the EU’s sustainability agenda. Compliance professionals should resist the temptation to interpret these amendments as a relaxation of corporate sustainability expectations and instead view them as an opportunity to strengthen ESG frameworks while leveraging new flexibilities to refine compliance strategies. 

The fundamental principles underlying the EU’s regulatory regime—corporate responsibility, transparency, and ethical business conduct—remain firmly entrenched, and organizations would be well-advised to maintain a long-term compliance perspective as they navigate these impending regulatory shifts.