This post is part of the GNHRE Blog Symposium, The Unmaking of the European Green Deal.
Plastic_bundles” by JMacPherson is licensed under CC BY 2.0.
Human rights and environmental due diligence legislation rests on a simple premise: businesses should identify, prevent, mitigate and account for the adverse impacts of their own operations and those of their value chains, regardless of where in the world those impacts occur. For much of the last decade, the European Union (EU) sought to turn that premise into law. The Corporate Sustainability Due Diligence Directive (CSDDD) was to be the clearest expression of that ambition. Less than two years after its adoption, however, the Omnibus reforms have hollowed out much of the Directive’s substance. This post asks what the CSDDD’s trajectory tells us about the human rights implications of the reforms and their compatibility with the obligations of the Union and its Member States under international climate and human rights law, and places it in the context of global developments.
From voluntary guidance to mandatory obligation
Until recently, the EU had ostensibly moved away from voluntary initiatives towards an approach grounded in corporate obligations. The Commission endorsed the UN Guiding Principles on Business and Human Rights (UNGPs) as the framework for corporate social responsibility, encouraged Member States to adopt National Action Plans, issued sector-specific guidance on implementation, and in 2020 launched its Sustainable Corporate Governance initiative. In parallel, several Member States – France, Germany and the Netherlands among them – enacted their own mandatory due diligence legislation. Announced as part of the European Green Deal, the CSDDD was meant to be the culmination of this trajectory.
Even in its original form, however, the CSDDD was not a particularly radical instrument. The Commission’s 2022 proposal was itself the product of compromise. The Directive that eventually entered into force in 2024 was already a negotiated middle ground rather than a maximalist model of corporate accountability.
The Omnibus and its stated rationale
The Commission has justified the Omnibus reforms by reference to simplification, competitiveness and coherence across the Green Deal’s legislative instruments, tracking recommendations attributed to the Draghi report. Central to that justification is cost: the Commission estimated that its proposed amendments to the CSDDD would save companies around €320 million a year. Modest as that figure is – SOMO has calculated that the costs of compliance would amount to just 0.13 per cent of the average shareholder payouts of the companies concerned – it has provided the backdrop for a set of amendments that go well beyond mere simplification.
The scope of the revised Directive has been narrowed considerably: the employee threshold has risen from over 1,000 to over 5,000 employees, and the turnover threshold from €450 million to €1.5 billion, whether met at entity level or on a consolidated basis by an ultimate parent company (or, for non-EU companies, €1.5 billion of turnover generated in the EU). SOMO estimates that this represents a reduction of 71 per cent compared with the Directive’s initial 2024 scope, leaving fewer than 1,000 corporate groups in scope. In practice, this excludes the vast majority of the EU’s mid-sized companies – including many operating in high-risk sectors such as textiles, agriculture and extractives.
The methodology for identifying supply-chain risk has also shifted. Instead of mapping their operations and chains of activities, companies need now only carry out a general ‘scoping’ exercise, based on information that is already reasonably available, to identify the areas where adverse impacts are most likely and most severe – and are expressly not required to identify impacts at the level of individual business partners. Under the original 2024 Directive, companies were expected to look across their entire chain of activities, including business partners several tiers removed from any direct contract. Today, by contrast, in-depth assessment is reserved for the most likely and severe adverse impacts and information may be requested from smaller business partners only as a last resort. [JO1] Because the most severe human rights and environmental risks typically arise upstream of a company’s direct suppliers, however, this [JO2] methodology risks leaving precisely the impacts due diligence was designed to catch – in raw-material extraction, informal labour or deforestation, for instance. Periodic assessments of the effectiveness of due diligence measures, moreover, are now due only every five years rather than annually.
The obligation to adopt and implement a climate transition plan aligned with the Paris Agreement and the EU’s climate-neutrality objective has also been deleted altogether. Companies are no longer required to adopt such a plan, let alone to put it into effect or to be held accountable for any gap between plan and practice. All that remains is a disclosure duty under the already-weakened Corporate Sustainability Reporting Directive, which requires companies within its scope to report on a transition plan only where they have adopted one.
Financial penalties have been reduced: whereas the 2024 Directive required Member States to set maximum fines of not less than 5 per cent of net worldwide turnover, the amended text caps them at 3 per cent. The obligation to terminate a business relationship as a last resort, where there is no reasonable prospect of preventing or mitigating an adverse impact, has been removed altogether; companies are now expected only to suspend the relationship where legally possible, and need not do even that where suspension could reasonably be expected to cause manifestly more severe adverse impacts. The planned EU-wide civil liability regime has been abandoned. Instead of a common liability regime applicable before the courts of any Member State, civil liability for due diligence failures will continue to depend on the laws of individual Member States. The planned harmonised regime mattered because it was designed to overcome a longstanding access-to-justice problem, as victims of corporate harm have often struggled to pierce the corporate veil separating an EU parent company from its foreign subsidiaries and suppliers. Its removal returns victims to exactly that patchwork, with their prospects of a remedy depending on which Member State’s courts they are able to access. The voice of affected rights-holders has been curtailed too. The definition of ‘stakeholders’ now covers only workers and individuals or communities whose rights or interests are, or could be, directly affected, and companies are no longer required to consult them before deciding to suspend a business relationship or when developing monitoring indicators. This sits uneasily with the UNGPs, which place meaningful engagement with affected rights-holders at the heart of due diligence.
These changes were confirmed when the Omnibus I Directive – Directive (EU) 2026/470 – entered into force on 18 March 2026, with transposition due by 26 July 2028 and application from 26 July 2029. Any reconsideration of the thresholds has been deferred to a Commission review due by July 2031.
A global trend, not an isolated retreat
The EU’s deregulation should not be read in isolation. Germany is simultaneously moving to weaken its own supply-chain due diligence act (the LkSG). A government bill that would abolish the reporting obligation and confine sanctions to the most serious violations remains pending before the Bundestag, and in July 2026 the governing coalition agreed to go further, confining the German regime to companies with at least 5,000 employees and €1.5 billion in turnover – a change that, by one estimate, would release some 95 per cent of the companies currently covered. More broadly, the CSDDD has attracted hostile responses from beyond the EU. Its extraterritorial reach had already drawn criticism from US lawmakers and the Saudi government as well as TWAIL scholars concerned about its Eurocentrism. These developments suggest that the Omnibus is not a discrete act of technical simplification but part of a wider, transnational pushback against mandatory corporate accountability.
Yet momentum for mandatory human rights and environmental due diligence continues to build outside the EU. South Korea reintroduced, in June 2025, a bill that would require large companies to identify, prevent and address human rights and environmental risks across their supply chains, backed by criminal as well as financial penalties. Brazil, Colombia, Indonesia, Japan and Thailand are each considering or drafting similar legislation; and in April 2026 Switzerland’s Federal Council proposed its own due diligence and transparency law, as a counterproposal to a renewed popular initiative for mandatory corporate accountability. The EU’s retreat therefore risks leaving it looking increasingly out of step with a broader, if uneven, global trend towards mandatory due diligence.
The Omnibus is also alarming in its own right as a legislative technique. As Alemanno has argued, the omnibus procedure is no longer an occasional administrative convenience but has become “the preferred vehicle for deregulation which bypasses procedural integrity” – a description that, as also noted on this blog, sits uneasily with core EU constitutional principles of legal certainty and legitimate expectations, as well as with the principle of non-regression. The European Ombudsman has since found maladministration in the way the Commission prepared the Omnibus proposal, including its failure to document the climate-consistency assessment required by the European Climate Law and to follow its own Better Regulation guidelines. Some commentators go further, framing the retreat from sustainable supply-chain regulation as part of a broader authoritarian turn, reinforced by the electoral advance of the far right across Europe.
Whatever label one attaches to it, the EU retrenchment sits uncomfortably alongside a growing body of jurisprudence pointing exactly in the opposite direction. The International Court of Justice’s 2025 Advisory Opinion affirmed that States’ climate obligations include the duty to regulate the conduct of private actors, such that a state’s failure to curb fossil fuel production, exploration licensing or subsidies may itself constitute an internationally wrongful act. Similarly, the European Court of Human Rights held in Verein KlimaSeniorinnen that States must put in place an effective regulatory framework to mitigate climate change, and, in Greenpeace Nordic and Others v Norway, while finding no violation on the facts, confirmed that States must assess, before licensing, the contribution of new petroleum extraction to climate change, including emissions released once the fossil fuels concerned are exported and burned. Against these findings, a CSDDD that no longer requires companies even to adopt climate transition plans sits uneasily with the due diligence obligations that the EU and its Member States bear under international law (McVey and Savaresi).
This view seems to be corroborated by domestic courts. In the Netherlands, the Hague Court of Appeal, while overturning the first-instance order requiring Shell to cut its emissions by 45 per cent, declared that Shell owes a human-rights-informed duty of care to help limit dangerous climate change (van Hasselt and Savaresi). In France, the Paris Judicial Court ruled in June 2026 that TotalEnergies had breached its duty of vigilance by failing to adequately account for its own Scope 3 emissions – those released when the oil and gas it sells are burned by customers – and ordered the company to revise its climate vigilance plan within six months.
The Human Rights Council’s Working Group on business and human rights has similarly read climate change into the UNGPs and joined four Special Procedures mandate-holders in writing to Saudi Aramco to challenge its expanding fossil fuel production, and its financiers’ continued support for it. Even so, the draft text of the UN Treaty on business and human rights – the one instrument that could anchor global corporate due diligence efforts in binding international law – remains conspicuously silent on climate change. Successive drafts have dropped earlier references to climate-related harms and to the right to a safe, clean and healthy environment, and the gap persists as states prepare for a twelfth round of negotiations on 12–16 October 2026. The result is a patchwork of national, regional and non-binding instruments – precisely the fragmentation that mandatory due diligence legislation like the CSDDD was meant to overcome (McVey and Savaresi).
Conclusion
The immediate legal consequences of the Omnibus for the CSDDD can be summarised along three axes. Temporally, transposition and implementation have both been delayed through the so-called “Stop the Clock” Directive and, subsequently, by the Omnibus I Directive itself, which defers application of the amended regime to July 2029. Substantively, the scope of companies and obligations covered has narrowed considerably. And institutionally, the enforcement mechanisms that gave the Directive its bite have been undermined, not least through the abolition of a harmonised EU-wide civil liability regime. Read alongside the parallel simplification of the Corporate Sustainability Reporting Directive, the kind and depth of information companies must disclose and investigate has been circumscribed.
The wider implication is a reframing of human rights and environmental due diligence itself, from a baseline expectation of responsible business conduct to an administrative burden to be minimised in the name of competitiveness. That reframing risks obscuring what due diligence law was designed to address in the first place – the very real human and environmental harms of corporate activity – at precisely the moment when, as this symposium’s introduction argues, the legal space for regulatory regression has narrowed rather than widened. Those who stand to lose most are not European companies but the workers and communities – many of them in the Global South – whom due diligence law was meant to protect, and who now face narrower corporate obligations, fewer avenues for engagement and a fragmented path to remedy. Measured against the principle of non-regression and the human rights obligations of the Union and its Member States, the unmaking of the CSDDD is therefore a question not only of policy, but of legality.