The European Parliament has adopted its position on the Omnibus proposal, a broad deregulatory initiative that significantly weakens key elements of the EU’s sustainability agenda. At the centre of the controversy is the Corporate Sustainability Due Diligence Directive (CSDDD requirements), hailed just last year as a groundbreaking step towards embedding business sustainability across global supply chains.
The Parliament’s new position, driven by centre-right and far-right parties, raises the company size threshold for compliance to 5,000 employees and €1.75 billion in annual turnover. This would exclude the vast majority of companies operating in the EU from the scope of the directive, including many with significant supply chain risk exposure. Keep reading as we delve into the news and what this means for businesses.
What’s changing, and why does it matter?
Originally adopted in 2023, the CSDDD requires companies to identify, prevent, and remedy environmental and human rights risks across their operations and value chains, or face fines of up to 5 percent of their global turnover.
Here’s the Parliament’s diluted version of the CSDDD requirements:
- Only the largest multinationals would need to comply.
- Companies cannot request information from smaller suppliers (under 5,000 employees) unless they can prove it’s strictly necessary.
- All provisions relating to climate transition plans have been deleted, removing a key mechanism for climate accountability.
- The changes would also gut the Corporate Sustainability Reporting Directive (CSRD) by exempting over 90 percent of firms originally covered.
Critics argue this represents a systemic retreat from transparency and due diligence. Human rights advocates and environmental groups warn the changes could enable labour abuses and environmental harm to go undetected, particularly in vulnerable regions. As WWF’s Mariana Ferreira noted, the new position turns once-promising laws into “performative exercises” with limited real-world impact.
Advance your sustainability reporting readiness — empower your team today
Business voices, political fault lines
The vote reveals sharp fault lines in the EU’s political landscape, with the European People’s Party (EPP) siding with far-right groups to weaken the CSDDD requirements. Climate campaigners have called the move a betrayal of the EU’s sustainability commitments, warning it sends the wrong signal ahead of COP30 and undermines the bloc’s credibility as a climate leader.
By contrast, many businesses have voiced support for the original directive, highlighting the need for consistent standards across global supply chains. A recent survey of 160 companies across 21 countries found that almost 60 percent oppose watering down the original CSDDD – a reminder that not all business interests align with deregulation.
This divergence raises serious questions about the EU’s ability to balance short-term economic pressures with long-term sustainability goals, particularly as global supply chain risks intensify.
Final thoughts – Why vigilance is key
Parliament will now enter negotiations with EU Member States to finalise the Omnibus package. Talks are expected to continue into early 2026. While the current position is not yet law, it signals an intent to significantly weaken due diligence obligations at a time when climate and social risks are rising.
For organisations committed to meaningful business sustainability, this moment serves as a reminder: progress depends not only on policy, but on internal capacity and leadership. At ISS, our corporate sustainability training equips professionals with the practical tools and strategic insight needed to not only navigate this ever-changing landscape, but lead from within, regardless of regulatory setbacks.
Dedicated to harnessing the power of storytelling to raise awareness, demystify, and drive behavioural change, Bronagh works as the Communications & Content Manager at the Institute of Sustainability Studies. Alongside her work with ISS, Bronagh contributes articles to several news media publications on sustainability and mental health.
