In April 2024, the European Union's Corporate Sustainability Due Diligence Directive (CSDDD) was adopted. A mouthful, but in simple terms: companies of a certain size and profit operating within the EU would be legally required to investigate and address potential environmental and human rights risks across their entire supply chain. With one of the most heavily lobbied laws in EU history, the bloc materialized its ambitions for corporate sustainability and accountability and positioned itself as a world leader in environmental and human rights regulation (1).

Only a year after the CSDDD’s adoption, however, a dark shadow hangs over the EU’s sustainability ambitions. The 2024 European elections resulted in the most right-leaning Parliament in EU history, spearheaded by Commission President Ursula von der Leyen's center-right alliance (2). The EU’s green agenda and sustainable business appear to be negotiated away in the name of competitiveness and deregulation. Through informal Council tactics, Germany and Italy orchestrated a political strategy that gathered support for what is now known as the Omnibus Package (3). This is a bundling of several key sustainability legislative files into a single negotiation bloc. This package threatens to water down, delay, or derail some of the EU’s most ambitious green laws. This article explores the implications of this Omnibus Package and explains why it risks hollowing out landmark sustainability legislation.

What is the Omnibus Package, and what is at stake?

In the name of fostering a favorable business environment and ensuring that companies are not stifled by excessive regulatory burdens, the Omnibus Package emerged as a political strategy to bundle multiple green and social policy laws into a single, interdependent negotiation bloc (3). Its core logic; if one law is delayed or is softened, the rest will be too. One of the centerpiece laws under threat is the CSDDD itself. Although the final structure of the Omnibus Package is not publicly confirmed, leaked Council documents and industry briefings reveal an intent to delay implementation and significantly weaken the scope of the directive (4).

The proposed changes are substantial. First, the directive’s scope is expected to narrow considerably. Companies affected may now be limited to those with one thousand or more employees and 450 million euros in turnover, which is a sharp increase from the original thresholds of 500 employees and 150 million euros. This change would exclude a large number of companies from the directive’s obligations (3). Furthermore, the requirement to monitor environmental and human rights risks throughout the supply chain may be limited to only Tier 1 suppliers. This directly contradicts evidence from organizations like The Center for Research on Multinational Companies (SOMO), which has documented that approximately 70 percent of labor and environmental abuses occur deeper in the supply chain, beyond direct contractual relationships (5). In addition, the civil liability provisions, which were meant to enable victims of corporate harm to seek justice in European courts, have also been diluted or rendered unclear (6),(7). This raises serious concerns about whether the directive will be enforceable in practice.

The broader sustainability framework at risk

Beyond the CSDDD, the Omnibus strategy poses a threat to several other central EU sustainability initiatives. One of the most important is the Corporate Sustainability Reporting Directive (CSRD). This law, which came into force in 2024, obliges large companies to report on environmental, social, and governance issues (8). A foundation of the CSRD is the principle of double materiality. This principle requires companies to disclose how sustainability issues impact them financially and how their operations impact the environment and society. It is an approach that aligns with the EU’s broader policy objectives and distinguishes the bloc from traditional financial materiality frameworks (9).

The Omnibus Package reportedly aims to weaken or even eliminate the requirement for double materiality, arguing that it places an excessive burden on businesses. Critics argue that this would gut the transformative potential of the CSRD and reduce it to a limited risk-management tool rather than an instrument of transparency and accountability (10).

In response to concerns over regulatory burden, SOMO investigated the costs of compliance and found that the total expense would amount to just 0.13 percent of the average shareholder payouts of the largest European companies in 2023. This contradicts claims that sustainability directives are too costly for business (11).

Several other legislative proposals are also under threat. These initiatives, including the Green Claims Directive, the Ecodesign Regulation, the Waste Framework Directive, and the Sustainable Products Initiative, are all facing delays of implementation and weakening in their regulatory ambition (4). The cumulative effect of these delays and weakening amendments could significantly undermine the EU's commitment to a circular economy and a sustainable single market.

Reactions: business divisions and civil society mobilization

Although some business groups, particularly traditional industry lobbies, have welcomed the Omnibus Package as a necessary move to reduce red tape, there are several companies who do not give their support (12). A growing number of multinational corporations, including Unilever and Nestlé, along with major institutional investors, have voiced support for strong sustainability legislation. These actors argue that clear and ambitious rules reduce long-term risks, enhance investor confidence, and level the playing field across markets (13,14).

Civil society organizations have responded with alarm. More than one hundred NGOs, including Amnesty International and the European Coalition for Corporate Justice, have signed open letters denouncing the Omnibus Package as a systematic attempt to dismantle the EU’s sustainability architecture (15). Legal scholars have warned that gutting the CSDDD and CSRD would undermine the EU’s commitments under international human rights law and the Paris Agreement (16,17). Trade Unions and climate advocacy groups like FNV and EFFAT have also responded with protests in Brussels to call on the European Commission to uphold its promises (18).

What do we do when the world is on fire and politicians favor profit?

As the EU enters its next legislative cycle, the fate of the Omnibus Package will be a defining moment. It will test whether the Union can maintain its status as a global leader in sustainability or whether it will retreat under the combined pressure of corporate lobbying and short-term political calculations. The weakening of the EU’s sustainability legislation is not just a bureaucratic matter, it’s a political and moral choice with global consequences. As Michel Scholte (Founder and Director of Impact Institute) and Andrea Rusman (CSRD advisory lead at Impact Institute) rightly argued in the NRC, “the Green Deal has been watered down, now companies must step up” (19).

But it cannot be left to businesses alone. Citizens, consumers, workers, and investors must also raise their voices. The planet is on fire, human rights are under threat, and future generations are watching. This is not the time to prioritize short-term profits over long-term survival. Contact your representatives, support civil society campaigns, consume consciously and hold companies accountable. The EU once set the standard for global leadership in sustainability. It must not turn back now. Shall we?

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2. Euronews. “European Political Landscape Shifts Right in 2024 as Far-Right Gains Ground.” Euronews, December 24, 2024. http://euronews.com/my-europe/2024/12/24/european-political-landscape-shifts-right-in-2024-as-far-right-gains-ground.
3. Pollet, Sandrine. “Brussels Plans Sweeping Cuts to EU’s Green Rules, Leaked Bill Reveals.” Politico Europe. http://politico.eu/article/brussels-plans-sweeping-cuts-to-eus-green-rules-leaked-bill-reveals/.
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