Speculation on the EU’s Omnibus plans intensifies as stakeholders expect major revisions to key ESG regulations.
Last week, the EU held a hotly debated roundtable on its upcoming omnibus simplification package, featuring businesses, industry groups and NGOs. Civil society has criticised the consultation process for being “rushed”, opaque and deferential to business interest.
The roundtable coincided with reports that the omnibus plans to heavily water down the substance of the CSDDD and CRSD - in a further blow to the EU's ESG ambitions.
As anxiety builds, many industry bodies, businesses and CSOs are doubling down on their efforts to save the hard-won legislation from erosion. Two new reports, for instance, have uncovered the true cost of compliance with sustainability regulation (spoiler: they’re minimal). Their findings challenge corporations’ position that the EU’s regulatory interventions will be overburdensome and a barrier to global competition.
See below for all this and more….
Upcoming events
New BHRC Webinar on IHL and Responsible Business Conduct
Following last week's successful launch, the next webinar in BHRC's series on "Responsible Business in Conflict-Affected and High-Risk Areas" will be held on the 6th March at 11am CET. This session will focus on the direct applicability of IHL to businesses – breaking down whether and how companies are legally bound by IHL, and the role of ICL in enforcing corporate responsibility. In this conversation, Wayne Jordash KC will be joined by Fauve Kurnadi, Legal Adviser at the Australian Red Cross to discuss the revised Private Business and Armed Conflict Report. Click here to register.
ETI Launches the STITCH Partnership
This month, the Ethical Trading Initiative (ETI)'s STITCH Partnership launched its landmark MSE Framework, a practical guide to embedding meaningful stakeholder engagement in human rights due diligence. BHRC had the opportunity to contribute to this crucial resource – which moves beyond a check-the-box approach, ensuring real impact for both workers and businesses. Join the webinar on February 25th, at 11:00 CET, for a deep dive into its key principles with ETI's consortium members: https://lnkd.in/e6zjt-CS
Corporate Sustainability Due Diligence Directive
Update:
Sources warn that the EU Commission's Omnibus package seeks to ‘significantly water down’ the CSDDD and CSRD.
Under its Omnibus initiative, the Commission will reportedly 'slash’ the number of companies subject to CSRD reporting requirements (to align with the CSDDD range). Experts estimate this could result in 85% of companies currently captured by the regulation no longer being in scope.
The Commission also plans to revisit ‘11 points’ of the CSDDD, including its climate requirements.
The proposed reopening and modification of the texts would derail the EU’s sustainability ambitions.
The EU Commission faces backlash for its controversial "roundtable" consultation on its Omnibus simplification plans.
On February 6th, the Commission convened industry groups, CSOs and businesses to discuss its approach to 'streamlining' ESG regulations.
Stakeholders have accused the EU Commission of rushing through the consultation stage without conducting a thorough impact assessment or providing sufficient transparency.
There is also widespread concern about the sidelining of CSO and human rights defenders throughout the consultation process. Asymmetric business representation during the talks, particularly those from the financial and energy sector, raises alarm about the direction of the amendment. More information on the roundtable, including the full list of invitees, is available here.
The UN, businesses and civil society release statements opposing the trajectory of the Omnibus package.
Over 150 international Civil Society organisations have signed a joint statement on the vitality of the EU's sustainability regs, in response to the omnibus roundtable. The coalition clarifies their unequivocal opposition to 'any re-opening of previously agreed legislation, such as the Corporate Sustainability Due Diligence Directive, at level one.' The organisations urge the Commission to pursue ‘simplification' through considered and transparent consultation with stakeholders and impacted groups.
A new Statement from the UN Working Group on Business and Human Rights encourages the European Union to ‘ensure that any developments relating to the Corporate Sustainability Due Diligence Directive are in alignment with the UNGPs.’
Statement from 162 financial institutions, primarily made up of investment groups, displays widespread corporate support for the CSDDD, CSRD and the EU Taxonomy.
The long-awaited Omnibus announcement has reportedly been postponed until early March
Notes/ Further Reading:
Analysis of France and Germany’s position on the CSDDD and CSRDD, in light of the omnibus initiative.
Frank Bold’s report compares the two governments' proposals for alterations to the CSRD and CSDDD, focusing on scope and the timeline for implementation.
On the CSRD, France is calling for the introduction of a new category of “mid-cap companies” to whom a simplified reporting standard would apply. They’re also “open to a 2-year postponement” on implementation.
In comparison, Germany has urged the Commission to increase the category threshold for large companies and for all other companies to be “relieved” of reporting duties. They’ve also explicitly called for a 2-year delay on the enforcement of obligations.
Regarding the CSDDD, France has called for the EU to increase ‘thresholds to European companies with over 5,000 employees, turnover < €1.5 billion worldwide, and non-European companies < €1.5 billion on the European market.’ In addition, they’ve also called for its indefinite postponement until these changes have been made.
Germany is yet to push for any modifications to the CSDDD.
A new study debunks myths on the financial burdens of the CSDDD.
The report from the Finnish Ministry of Foreign Affairs and Hanken School of Economics, entitled, ‘How do EU sustainability regulations affect Finnish companies?’, concludes that Finnish companies impacted by the CSDDD and CSRD are "not so much concerned about over-regulation, competitiveness or GDP, but rather about the uncertainty created by the EU itself over the fate of regulation”.
Implementation timeline:
- March 2025: Announcement due on the EU omnibus simplification package.
- Present- 26 July 2026: Member States transpose the requirements set by the Directive.
- 2026/2027: CSDDD takes effect at the national level.
- From 2027: Companies with 5,000+ employees and a net turnover of 1 ,500 million EUR must comply.
- From 2028: Companies with 3,000+ employees and a net turnover of 900 million EUR must comply.
- From 2029: Companies with 1,000+ employees and a net turnover of 450 million EUR must comply.
EU Deforestation Regulation (EUDR)
Updates: None
Further Reading/ Listening:
Profundo calculates the (minimal) costs of compliance with the EUDR
The report finds that EUDR costs account for an average of 0.10% of annual revenues for large companies and SMEs.
This is a 'fraction of the European Central Bank’s acceptable annual inflation target', which currently sits at 2%.
Forbes provides insights into how US corporate actors will address deforestation in 2025.
The piece reflects on how the passage of the EUDR will impact corporate responses to deforestation risks across the globe this year.
Implementation timeline:
Obligations stemming from the regulation will be binding from:
- 30 December 2025: for large operators and traders
- 30 June 2026: for micro- and small enterprises
EU Forced Labour Regulation (FLR)
Update: None
Further Reading:
- The 2025 ILO report on the Application of Conventions and Recommendations provides strong recommendations on forced labour prevention.
- ASI and ECCR published a must-read 24-page explainer on the EU’s FLR.
Implementation timeline:
- 2026: EU Commission to publish guidelines, including a forced labour risk database.
- 14 December 2027: law becomes applicable
Event Recap: OECD Forum
Last week, the OECD held its annual Forum on Due Diligence on Apparel and Footwear. During the forum BHRC's Grace Camara, Garment Sector Lead, and Pallavi Sharma, Agri Sector Lead, engaged on key HR issues within garment and cotton production. Highlights of the forum included a side-session on disengagement from high risks regions (co-hosted by the Coalition to End Uyghur Forced Labour and Clean Clothes Campaign. If you missed the BHRC team at the Forum and are interested in learning more about our work, reach out to Pallavi or Grace today!
Disclaimer: This newsletter is for general informational purposes only. It does not, and is not intended to, constitute legal advice.