"Reaction to Omnibus-proposal made by the European Commission," 27 February 2025

Danish Institute for Human Rights is concerned with the Omnibus-proposal made by the European Commission, which is a significant departure from the EU’s commitment on business and human rights. The proposal is suggesting comprehensive changes to instruments like the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), which seek to regulate business impacts on human rights and the environment. But rather than streamline and align, the proposed changes risk undermining the ability of the instruments to meaningfully address the challenges of environmental degradation, climate change, and respect for human rights.

The CSDDD-proposals might lead to a hollow instrument:

• The obligation to conduct due diligence has been altered from a pragmatic risk-based approach to an approach which imposes artificial limits and which would be ineffective at addressing human rights impacts.
• The limits on stakeholder engagement undermines the effectiveness of the CSDDD and will potentially turn due diligence into a checkbox exercise.
• The proposal removes the EU civil liability regime, leaving the question to national laws of EU member states, which will create fragmentation and reduce legal certainty

...The Omnibus proposal relies on approaches which are known to be ineffective at addressing human rights impacts. These include reliance on contractual codes of conduct without accompanying engagement with suppliers or the exercise of leverage, use of social audits, certification and assurance without meaningful engagement with human rights impacts which may occur beyond Tier 1. Without adopting a risk-based approach to the identification and management of human rights impacts, reliance on these methodologies will only create administrative burdens without substantial improvements for human rights.

CSRD proposals carry significant setbacks for human rights:

• Large reduction of the number of companies in scope disregards critical data gaps on social sustainability
• Limits on information requests on companies not mandated to report on sustainability risks hindering access to critical information on human rights impacts in the value chain.
• Revision of the European Sustainability Reporting Standards risk removing or diluting human rights related reporting requirements

The proposal sends a worrying signal to the business community that human rights and the environment are no longer priorities requiring urgent action at a time where the exact opposite message is needed. 

[The full reaction can be read via the link above]

See also "Experts criticise leaked draft Omnibus proposal for introducing deregulation rather than simplification" (FT Sustainable Views) for experts and practitioners' critique of the tier-1 focus and other issues.