Perspectives on the Omnibus Simplification Package and the Future of EU Human Rights and Environmental Due Diligence and Reporting Directives

Political Landscape

• After EU elections, center-right and far-right coalitions are pushing for deregulation under the guise of “simplification” 
• The “simplification” effort is largely driven by industry lobbying from Germany, France, and Italy
• Supported by the Draghi report, the new political narrative emphasizes competitiveness over sustainability
• Concerns about regulatory backsliding could jeopardize the EU’s leadership in responsible business conduct
• The European Central Bank has warned that drastically narrowing the scope of reporting may impair financial market stability due to loss of critical investment information

Restriction of Due Diligence to Tier One Supplier

• Legally unclear, burdensome, and inconsistent with UNGPs and OECD Guidelines
• Likely to create perverse incentives, where less mature companies are rewarded for being unaware of downstream risks
• In conflict with other EU regulations (e.g., on forced labor, batteries), which presume deeper supply chain diligence
• Comparisons: Germany’s law restricts to first-tier and has triggered criticism for its inefficiency and administrative burden vs. Norway’s law has no such limit and is functioning effectively, even among SMEs

Civil Liability (Article 29)

• The risk of removing harmonized liability provisions
  
  • 27 diverging national systems could reduce consistency and access to justice
  • Victims could lose pathways to legal remedy, especially in jurisdictions with weak tort systems
  • Overriding mandatory provisions, which protected victims, have also been removed
• Article 29 was never meant to fully harmonize liability, but provided useful common criteria

Harmonization

• A directive should allow member state flexibility in transposition
• Maximum harmonization proposed in areas like due diligence process, supervision and personal scope leads to concern about “harmonizing bad law” and overriding more progressive national laws

Global Implications & Reputational Risk

• EU risks losing its role as a global leader on responsible business conduct
• Countries in the Global South (e.g., Thailand, Brazil, Colombia) had looked to the CSDDD as a model, so its weakening might undermine global efforts

Closing Remarks

• The entire process is deeply political, increasingly disconnected from expertise and stakeholder consultation
• Poor procedural quality, such as lack of impact assessments and consultations, may expose parts of the Omnibus Package to legal challenge
• The future trajectory of EU legislation depends heavily on upcoming Council votes in Council at the end of the Polish presidency still in June, or possibly during the forthcoming Danish presidency in Parliament in October. After that the negotiations between Council and Parliament might last until the beginning of 2026. There is still time for statements to correct the course.
• Without corrections, the current approach could result in symbolic compliance with minimal rights-holder impact, undermining both business integrity and human rights protection

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