EU Omnibus Proposal Sparks Pushback From Global Firms

A group of 11 multinational companies including Unilever, Nestle, Mars, and DP World, have complained that the European Commission's proposed omnibus package aimed at simplifying sustainability reporting rules across the EU is set to cause undue complexity. These business entities said changes to status quo, such as the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), stand to blow climate change gains off course. The omnibus package, which is due for publication on February 26, 2025, was supposed to deal with overlapping regulations and cut red tape. Instead, industry leaders fear that opening agreed legal texts may destabilize the regulatory landscape and unwind investments.

DP World Vice President for Sustainability, Nicholas Mazzei, however sounded a caution note on the planned amendments. He wrote to the European Commission urging it not to backtrack from its commitment in the original frameworks by stating how predictable legislation helped with business planning. "We at DP World want the Commission not to go back on committed legislation covering supply chain due diligence (CSDDD) and reporting (CSRD)," he said.

The CSRD and CSDDD are the backbones of the EU's sustainability reporting landscape. The CSRD is focused on enhancing transparency and standardization in ESG reporting across the bloc, while the CSDDD requires corporate accountability for human rights and environmental impacts along value chains. These directives represent a significant step forward in integrating sustainability into corporate governance but have been criticized for their complexity and overlapping requirements.

Small and medium-sized enterprises (SMEs), in particular, have highlighted the challenges posed by these frameworks. Yogesh Chauhan, Senior Director of Sustainability at HubSpot, pointed out the difficulties faced by smaller businesses in meeting reporting obligations. “If you’re a small business that employs 10 people, that’s going to be really hard work,” Chauhan said, describing the struggle of calculating emissions and setting sustainability targets.

The omnibus package is intended to address these concerns by streamlining reporting requirements and consolidating data points, but such revisions risk rolling back the hard-won progress made under existing frameworks. The companies have expended significant resources on preparing for CSRD and CSDDD, so any significant revisions could derail those efforts.

In their letter to leadership in the European Union, these companies said a stable environment of clear direction will be important because renegotiation would undermine investor confidence and delay progression on sustainability. "Predictability is critical for investment and planning," the letter said, requiring consistent and strong reporting standards, meeting stakeholder expectations.

The omnibus proposal has also received international attention, especially from the United States. Lawmakers in the United States have criticized the extraterritorial scope of the CSDDD. This provision requires companies operating in the EU to consider the human rights and environmental impacts of their global supply chains, which has sparked resistance from businesses outside Europe.

European Commission President Ursula von der Leyen acknowledged the concerns raised by industry leaders and other stakeholders. Speaking on the issue, von der Leyen emphasized the content of the laws while addressing redundancy in the reporting process. "The content of the laws is good, we want to maintain it. But the way we get there-the questions we are asking and the data points we are collecting-is too much, often redundant and overlapping," she said.

The omnibus package is expected to suggest changes to reporting deadlines, company scopes, and data requirements with the view of achieving a balance between simplification and the robustness of sustainability reporting. These changes will probably be in consultation with businesses, civil society organizations, and policymakers to ensure that the final measures are practical and effective.

For businesses, the uncertainty surrounding the omnibus proposal has created additional challenges. Companies must continue to comply with existing regulations while preparing for potential changes. This dual burden underscores the importance of industry collaboration with the European Commission to develop workable solutions that address stakeholder concerns without compromising the integrity of sustainability reporting.

During this legislative process, the future of EU sustainability laws will depend much on the Commission's ability to navigate competing demands of simplification and accountability. The impact is likely to spread to business houses, investors, and consumers who would influence sustainability efforts across the region.

Nicholas Mazzei summed up the industry's expectations succinctly: "Our customers want sustainability that is consistent, rigorous, and easily measurable." Delivering on these expectations while addressing regulatory complexities will be a delicate balancing act for the Commission in the months ahead.