Waiting for the EU Omnibus: Given the uncertainty, how should businesses prepare their human rights programme?
Business Ethics Debates | read time: 7 min
Published: 2 June 2025
Released by the EU Commission earlier in February this year, the EU Omnibus Package proposes to substantially amend much of EU sustainability legislation – most notably the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). It is likely to be several months before the proposed changes are voted on and confirmed. In the last month both German Chancellor Friedrich Merz and French President Emmanuel Macron have argued for the CSDDD to be repealed completely, calling its future further into question, while the Danish Industry Minister argued more recently that the law should be maintained in its original form. Our latest debate asked how companies should respond in the face of this ongoing uncertainty, especially regarding the future of the CSDDD.
Our speaker, Dame Sara Thornton, opened the debate by highlighting the modern slavery case discovered at a McDonald’s branch in Cambridgeshire last year. This case was used to illustrate the fallibility of voluntary due diligence and suggest that only through legislation will companies be persuaded to fully investigate and remedy their human rights harms.
Dame Sara Thornton then addressed some of the key issues regarding the proposed amendments to the CSDDD contained in the Omnibus Package.
The proposal to focus due diligence efforts on Tier 1 business partners raises a number of concerns. First, this diverges substantially from the best practice approach set out in the UNGPs. Second, it risks creating blind spots for companies given that often their most severe risks lie further down the supply chain. And third, it may also shift the onus and responsibility for identifying issues beyond Tier 1 onto NGOs and civil society groups, as it appears that businesses would only be required to investigate beyond Tier 1 in response to “plausible information” of human rights harms from NGOs and similar sources.
Scrapping the EU-wide civil liability regime in favour of allowing national governments to adopt their own approach to remedy may also be problematic and risks creating significant confusion.
Overall, it was suggested that the Omnibus debate increases the risk of ‘greenhushing’ as companies decide that it is better not to report on their environmental and social performance, in part given the political backlash.
However, despite the current political climate and the lack of clarity resulting from the Omnibus, it was argued that the best long-term plan for companies is to continue to practise risk-based due diligence and to act where human rights concerns are identified. To do otherwise creates a risk not only to the business and its shareholders, but also to people and planet. It was argued that irrespective of what the law stipulates companies should be proud to do the ‘right thing’ and will be rewarded for doing so in the long term.
The debate: to change direction or stay the course?
Debate participants were asked if their companies were carrying on with their human rights due diligence activities regardless of the proposed Omnibus Package, or whether they have changed their approach and put more in-depth programmes on hold. While the majority indicated that they were carrying on as before, despite the challenges this presents, several were choosing to change course.
Choosing to change course
A variety of reasons were given by those whose programmes are being reviewed or put on hold.
- By reducing the demands on companies, the Omnibus Package has also reduced the risk of non-compliance with the CSDDD. As such, if the CSDDD is no longer the ‘burning platform’, companies are choosing to focus resources on other more immediate risks. In some cases, companies are focusing on legislation where the requirements are not subject to further change such as the Modern Slavery Act and the EU Forced Labour Regulation.
- The costs of complying are high and if these costs can be avoided, even in the short term, this is helpful for companies that are facing challenging economic conditions at the moment.
- The plan to roll back the complexity of CSRD reporting requirements was welcomed by some, including those who had already undertaken considerable work to comply with the original legislation.
- Others are pausing to take stock, under pressure to demonstrate the added value that would result from conducting deeper, more widespread due diligence that may no longer be mandatory. This will be critical if senior management are to be persuaded to allocate resources for activities no longer required as mandatory.
- Without the immediate pressure to comply, others are electing to watch and wait. This was particularly the case for companies which are headquartered in the EU rather than in the UK
Nevertheless, all of the organisations which said they were changing course reported that they were in fact scaling back or slowing down their activities rather than discontinuing their human rights due diligence programmes entirely.
Staying the course
For many companies, the reasons to continue with their due diligence programmes go beyond legislative requirements.
- You can’t Omnibus the risk. Many view supply chain due diligence as a key component of their business risk management and will continue to take a risk-based approach to their human rights due diligence programmes, in line with best practice, particularly when they may already be aware of issues further down the supply chain.
- The proposed revision of the CSDDD is flawed in design; it is more useful for companies to comply with the requirements of the original text. Whilst the Omnibus’s premise is to reduce the compliance burden for companies by instructing them to focus their resources on their Tier 1 business partners, it is arguably more logical and impactful for companies to target their efforts towards higher-risk areas most of which may be further down the supply chain instead.
- Many have already made significant progress strengthening and extending their human rights programmes with clear objectives and roadmaps already in place and dedicated resources committed to implementation. As such, at least in the short term, they are unlikely to change course while the Omnibus is being debated.
- Understanding where human risks might lie is important business intelligence. By actively managing human rights risks across the supply chain, organisations can shore up their supply chain resilience, better protect themselves from economic and geopolitical shocks, and operate more efficiently and cost effectively.
- With other legislation continuing to demand supply chain transparency, boards are still at risk of non-compliance irrespective of the Omnibus debate. This is also driving companies to stick with their programmes until the EU discussions around the Omnibus have concluded, with some expressing concern that the proposals are more about politics than business. The French Duty of Vigilance Law, Norwegian Supply Chain Act, EU Deforestation Regulation and the EU Battery Regulation all require some form of supply chain due diligence. The EU Labour Regulation in particular was highlighted. Although this has a specific focus on forced labour and does not introduce due diligence requirements which go beyond the original CSDDD text, it will inevitably force companies to conduct meaningful due diligence further down their supply chains to mitigate the forced labour risk.
- The business case for continuing extends to customers and investors. Customers are asking questions about sustainability commitments, in part to manage their own risks. Sustainability also remains high on the agenda for certain categories of investors who are looking for commitments to managing human rights impacts that align with UNGP and OECD guidelines.
Challenges and opportunities
The commitment to proactive risk-based human rights due diligence – both on principle and as good business sense – was a sentiment widely echoed. Nevertheless, the Omnibus has created and exacerbated a number of challenges.
- It is more difficult to convince senior management and boards to allocate time and resources to a complex area that is not currently an immediate compliance issue.
- Human rights due diligence is often perceived by suppliers as a compliance burden, given suppliers frequently receive requests often for the same data from multiple sources. Companies may need to collaborate more to reduce the burden on some suppliers. They may also have to increase training and awareness to help suppliers understand the human rights risks involved and why they are important.
- The potential watering down of the CSDDD removes an important source of leverage for companies, making it harder for businesses to push their suppliers to identify and mitigate any human rights impacts.
- There is a lack of awareness and understanding beyond human rights practitioners – notably in the media and amongst politicians and EU policymakers – of what human rights due diligence entails. More needs to be done to demonstrate to the wider world the benefits of conducting this due diligence.
- The CSRD and the CSDDD opened up the opportunity for greater collaboration between human rights and environmental teams in companies, by prompting companies to understand and consider how their human rights and environmental impacts may be linked. This knowledge sharing may be jeopardised by the Omnibus.
- The UK has been out of step with the EU’s sustainability legislation for several years. There has been pressure from businesses and human rights advocates to update UK law in line with the EU. With the Omnibus placing the CSDDD on hold, could this be the time for the UK to take the lead and set the standard?
The GoodCorporation view
Irrespective of the Omnibus Package’s outcome, many companies remain committed to implementing best practice human rights due diligence as set out in the UNGPs and by the OECD.
As such, while the legal imperative for extensive supply chain due diligence may be weakened, the business case for taking a more comprehensive and risk-based approach remains. In addition, many are also motivated by the moral imperative to eradicate human rights harms from their operations and supply chain, viewing this as part of their licence to operate.
We will continue to support our clients in the development of a best-practice approach to human rights due diligence. As was said at the debate, you can’t Omnibus the risk, and failing to identify and mitigate human rights harms is a substantial risk.
For businesses looking to take a proactive and risk-based approach which aligns with internationally recognised best practice, our Framework on Human Rights and Environmental Due Diligence is a good starting point. Whilst mapped to the original CSDDD text it is also aligned with best practice, notably the UNGPs, and thus remains a key tool for any company looking to identify, assess and mitigate their human rights and environmental risks.
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