"Profound cynicism or magical thinking? The basis of the EU omnibus", 3 April 2025

Transparency, a risk-based approach and an EU-wide civil liability regime need to be maintained

At a glance

• The European parliament’s vote this week to “stop-the-clock” on agreed protections for people and planet contained in the CSDDD and CSRD is deeply disappointing
• The omnibus, coming at a tumultuous time for global markets, creates further uncertainty and instability for business and investors
• The EU has inspired responsible leaders and legislators around the world to prepare similar legislation. It is in danger of moving from being a leader to being left behind, based on a distorted understanding of competitiveness

The European parliament’s vote this week to “stop-the-clock” on agreed protections for people and planet contained in the Corporate Sustainability Due Diligence Directive and the Corporate Sustainability Reporting Directive is deeply disappointing. The vote stalls and imperils essential legislation designed to strengthen European business in the long term, ensuring competitiveness and sustainability. [...]

We want to underline three elements that need to be preserved as a priority:

1. Maintaining transparency on business performance

Without robust consistent data, responsible investors cannot allocate their capital efficiently and effectively to sustainable companies and projects. [...]

2. Stick to the implementation of effective risk-based approaches to sustainability due diligence

The proposal for the CSDDD to focus due diligence obligations to immediate suppliers in value chains (Tier 1) and on a less frequent basis does not make business sense. [...]

A proactive risk-based due diligence process identifies the most salient adverse impacts. It does so in engagement with grassroots organisations, such as unions in factories and fields.

Through a focus on Tier 1, companies fear a return to bureaucratic, costly and ineffective box-ticking approaches that end up benefiting social audit consultants and the Big Four accounting firms, not the company’s affected stakeholders.

3. Do not force a fragmented legal landscape of civil liability on companies.

Laggard companies have long operated with impunity and will continue to do so unless there is a real cost. The foreseen civil liability, now proposed to depend entirely on national laws, would lead to forum shopping and change how those in the boardrooms of poor-performing companies assess and mitigate risk and scrap the chance for thousands of rights holders to remedy abuse. [...]

If this snowballs and major economies south and north shift to similarly high standards to protect their citizens and environment, Europe is in danger of moving from being a leader to being left behind, based on a distorted understanding of competitiveness.