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In the face of growing geopolitical challenges, the European Commission (EC) has been pressured to take steps that will supposedly safeguard and boost the competitiveness of the European Union’s economy.
Doing so was a direct response to the 2024 Draghi Report (written by former European Central Bank President Mario Draghi), which first raised concerns regarding EU competitiveness. According to the Draghi Report, competitiveness can best be bolstered through the reduction of regulatory burdens on companies and the “removal of overlaps and inconsistencies across the whole legislative chain.”
In February 2025, the EC crafted a simplification package, Omnibus I, which was approved following fast-track negotiations by the European Parliament (EP) in December 2025 and the European Council on 24 February 2026. At the heart of Omnibus I are amendments to two directives: the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), which was only adopted in 2024. While amending these directives is supposed to simplify and harmonise business practices, doing so also considerably lowers the EU’s ambitions (particularly in the case of amending the CSDDD), both as a standard-setter and an innovative regulator that prides itself on promoting an economy that respects human rights and the environment.
The EU’s Omnibus Package I aims to simplify corporate sustainability reporting, but has also raised concerns about weakened commitments. What exactly does the Directive change, and what does this mean for corporate accountability in Europe?
Crucially, the amended version of the CSDDD weakens a number of key provisions present in the original text. These changes will have real consequences: overall, they will make it significantly harder for victims of corporate abuse to seek justice and for companies to prevent harm in the first place.
Firstly, the newly amended CSDDD will significantly restrict the scope of the legislation. While the Directive originally applied to companies that earned over €450 million and employed 1,000 or more, the more recentversion of the text has a much higher threshold. Only European companies with over 5,000 employees and €1.5 billion in worldwide turnover will be affected, while the financial sector is entirely excluded from its scope. Secondly, it eliminates Article 22, which required companies to adopt and implement effective climate-transition plans. Thirdly, the amendment to Article 3 substantially narrowed the definition of “stakeholders” to include only those who may be directly affected by a company’s operations, while the amendment to Article 29 eliminated the reference to an EU-wide civil liability regime.
These changes will have real consequences: overall, they will make it significantly harder for victims of corporate abuse to seek justice and for companies to prevent harm in the first place.
While these amendments collectively undermine both access to justice for affected communities and the preventive function of corporate due diligence obligations, it is worth noting that the Directive does still establish some ground rules for corporate accountability. For one, it enacts a legal duty for large companies to respect human rights and the environment throughout their global value chains. What’s more, it requires companies to identify, prevent, stop, and remediate harm to workers, communities, and the environment within and beyond the EU. Finally, it forces EU member states to ensure full compensation for victims of corporate abuse where companies are found to be civilly liable, allowing those harmed by due diligence failures to seek remedies before national courts.
Taken together, however, these remaining provisions represent a minimal baseline rather than the ambitious framework originally envisaged.
Beyond its effects within the EU, how might the Omnibus I package influence global sustainability governance and the EU’s role as a standard-setter?
Through the adoption of the Omnibus I package, the EU is sending a particularly worrying message. At a time of escalating climate and human rights crises, the EU appears to be retreating from its responsibility to hold powerful companies and major polluters accountable. Equally troubling is the scale of internal and external pressure that contributed to this rollback. A recent investigation by the Dutch non-governmental organisation (NGO) SOMO revealed how a secretive alliance of eleven multinational corporations – including some of the world’s most powerful fossil fuel interests – worked to derail the EU’s flagship supply chain law by targeting key policymakers across EU institutions. These efforts were further amplified by foreign political pressure, including a joint letter from senior US and Qatari government officials urging EU leaders to scale back the CSDDD, adding significant geopolitical weight to the push for dilution.
This stands in stark contrast to the EU’s 2019 positioning as a global leader in promoting sustainable and socially responsible business conduct, strengthened by its dedication to the five-year legislative process that led to the adoption of the original CSDDD in 2024. This robust process included extensive consultations with a wide range of stakeholders and helped inspire similar initiatives outside the EU, contributing to a more level playing field around the globe. The EU is also widely recognised as a leader in clean technology innovation and sustainable industry – expressed clearly in the European Green Deal, which aimed to “transform the EU into a fair and prosperous society with a modern, competitive economy, ultimately achieving climate neutrality by 2050.”
Against this backdrop, Omnibus I represents a notable retreat from the economic model the EU has sought to promote. This development could encourage further deregulation elsewhere, but could also lead to other states stepping in to fill the vacuum left by the EU. In this scenario, the EU would forfeit its role as a global standards-setter, with its businesses ultimately having to comply with rules set by non-EU states.
With the consultative process for the Omnibus package compressed into less than 24 hours, what does this accelerated approach imply for the EU’s democratic legitimacy and its role in promoting transparent, rules-based governance globally?
The Omnibus package and the manner of its adoption highlight fundamental tensions at the heart of contemporary EU governance: between efficiency in policymaking on the one hand, and respect for EU law and foundational principles on the other. The legislative procedure has been criticised as being contrary to the EU Treaties, particularly Article 2 TEU, which sets out core requirements for EU lawmaking, including that it be evidence-based, participatory, and proportionate. As has been noted elsewhere, these principles are not obstacles to good governance but rather its very essence.
These concerns were further voiced by an official complaint lodged by several NGOs with the European Ombudsperson. In a decision issued on 25 November 2025, the Ombudsperson concluded that the European Commission’s handling of Omnibus I on corporate sustainability rules – and the 2024 ‘simplification’ of the Common Agricultural Policy – violated fundamental principles of good administration, including transparency, inclusiveness, and evidence-based lawmaking.
The only viable path forward is one that preserves the very essence of the European project: a commitment to human rights, the rule of law, and democratic governance.
Ultimately, the EU’s credibility as a global actor depends on its ability to remain competitive without renouncing the values that underpin its existence. The only viable path forward is one that preserves the very essence of the European project: a commitment to human rights, the rule of law, and democratic governance. These foundational principles are not a constraint on Europe’s global role, but rather the basis on which the entire European project rests.
Maddalena Neglia is Director of Globalisation and Human Rights at the International Federation for Human Rights. She is a member of the ENSURED expert network.
You can also find content from ENSURED's Expert Blog on the Global Policy website.
Photo: Wesley Tingey / Unsplash (Unsplash Licence)
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