March 2025
[PDF version available below]
On 26 February 2025, the EU Commission published a proposal for a package of reforms to the EU legal framework on corporate sustainability.
The so-called ‘Omnibus’ proposals ostensibly aim at reducing obligations on companies operating in the bloc and increasing their competitiveness, yet they stand to roll back years of advances on corporate accountability and respect for human rights.
Primary among the proposed reforms are extremely regressive proposals on the Corporate Sustainability Due Diligence Directive, which was agreed in 2024 after several years of painstaking negotiations among the EU’s joint legislators, with input from human rights defenders, civil society and businesses.
The Corporate Sustainability Due Diligence Directive obliges companies to identify and assess human rights and environmental risks related to their activities and those of their direct and indirect business parters. Under its provisions, companies affected would have to take steps to address and mitigate these risks, track their effectiveness in doing so, and communicate publicly what they have done.
The Directive is far from perfect, but its agreement marked a major step in the right direction more than a decade on from the UN Guiding Principles on Business and Human Rights, which developed a non-binding framework on the responsibility of businesses to respect human rights.
It improves paths to accountability for victims of corporate abuses and includes obligations for companies to mitigate their climate impact.
If the Commission’s proposals are accepted by the European Parliament and Member States in the Council, the Corporate Sustainability Due Diligence Directive risks being stripped of all its power. The changes would burden companies with check-box exercises without any real impact for the people around the world whose rights are being violated and undermined by companies, including human rights defenders.
The following are some of the main issues with the Commission’s proposals in relation to human rights defenders, directly or indirectly:
- The Due Diligence Directive obliges certain companies to adopt and put into effect a transition plan for climate change mitigation. Under the Omnibus proposals, companies would only have to adopt a plan, but have no obligation to put it into effect, laying the ground for more greenwashing by businesses (articles 1(c) and 22 of the Due Diligence Directive)
- The Due Diligence Directive obliges companies to address human rights and environmental risks arising from the operations of their direct and indirect business partners. It is a risk-based approach. Under the Omnibus proposals, they would only have to concern themselves with risks in the activities of direct partners, allowing them to ignore risks further along the chain, where most violations occur (article 8 of the Due Diligence Directive)
- The Due Diligence Directive obliges EU Member States to ensure companies can be held liable for damage caused by their failure to carry out proper due diligence. Under the Omnibus proposals, this would no longer be obligatory, but merely an option for Member States, frustrating the right to remedy for violations of human rights (article 29.1 of the Due Diligence Directive)
- The Due Diligence Directive provides that trade unions, environmental and human rights organisations can support victims of human rights violations in holding companies to account. Under the Omnibus proposals, this provision would be removed, increasing the barriers faced by people seeking to access justice (article 29.4 of the Due Diligence Directive)
- The Due Diligence Directive expressly includes human rights defenders as stakeholders in the due diligence process. Under the Omnibus proposals, they would be excluded, limiting the avenues for human rights defenders to engage with companies and inform them of human rights risks (article 2(n) of the Due Diligence Directive)
- The Due Diligence Directive obliges companies to consult stakeholders when deciding to terminate or suspend a business relationship linked to human rights risks and monitoring the effectiveness of their own due diligence policies. Under the Omnibus proposals, the instances in which consultation is required would be dramatically narrowed, and exclude both these situations, moving away from the people-centered purpose of due diligence (articles 13.3(c) and 13.3(e) of the Due Diligence Directive)
- The Due Diligence Directive obliges companies to assess the effectiveness of their own due diligence processes at least every 12 months. Under the Omnibus proposals, companies would only have to assess the effectiveness of their policies every 5 years, meaning problematic and ineffective policies would stay in place for longer (article 15 of the Due Diligence Directive)
- The Due Diligence Directive obliges the EU Commission to assess the need for further due diligence requirements for companies in the financial sector. Under the Omnibus proposals, the Commission would no longer have to assess the need for due diligence by investors and financial service providers (article 36.1 of the Due Diligence Directive)
The Omnibus proposals mark a shameful shift from the EU Commission, seeing it put deregulation above sustainable business, the protection of human rights and support for human rights defenders.
The reforms will now have to be considered by the European Parliament and the Member States in the Council. It is vital that they are rejected.