Omnibus Package: EU Commission weakens corporate accountability and workers’ protection

As foreseen last month in its Competitiveness compass, the European Commission adopted on the 26th February several new proposals to allegedly simplify EU rules for business. According to ETF, these changes will mostly weaken workers’ rights and environmental protections

The fear expressed by trade unions and NGOs since a draft text leaked last week are now confirmed, as the so-called “omnibus package” is out. The package includes amendments to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Adjustment Mechanism (CBAM), and the InvestEu Regulation.

Rather than simplification, ETF argues that it is dangerous and reckless deregulation. The European Commission, under the pressure of corporate lobbyists, is attacking the very core of the legislation it introduced itself only a few years ago after many years of trade union pressure.

Regarding the Corporate Sustainability Reporting Directive (CSRD), the Commission is severely weakening the text by:

1. Postponing the reporting requirements by two years for large companies that have not yet started implementing the CSRD and for listed SMEs (Wave 2 and 3).
2. Reducing the scope of the directive by 80% as the reporting requirements would now only apply to large undertakings with more than 1.000 employees and either a turnover above EUR 50 million or a balance sheet total above EUR 25 million. For companies not falling under the scope of the CSRD, the Commission will adopt by a delegated act a voluntary reporting standard which will limit the information that can be requested from companies in their value chains with fewer than 1,000 employees.
3. Revising the European Sustainability Reporting standards (ESRS) and reducing the number of data points to be covered by companies.
4. Deleting sector-specific standards requirement although these are already in the making through EFRAG, including for the road sector.

Concerning the Corporate Sustainability Due Diligence Directive (CSDDD), which was adopted only last year, the Commission is not only postponing the transposition deadline (to 2027) and the first wave of application of the CSDDD (to 2028 for the largest companies), but also, unfortunately, “relieving companies from the obligation to systematically conduct in-depth assessment of their entire value chain” despite this being at the very heart of the legislation. This legislation created for the first time an obligation for companies to systematically conduct in-depth assessments of adverse impacts that occur or may occur in their often complex value chains. Now the Commission wants to focus only on direct business partners, ignoring the vast majority of problems which happen deeper into the supply chain, beyond tier 1. Moreover, the Commission wants to delete the harmonised EU conditions for civil liability and the obligations for Member States regarding representative actions led by trade unions or NGOs. Hence, it would remain extremely hard to seek justice when companies fail to meet sustainability obligations. Finally, on environmental aspects, companies would not be required anymore to implement climate transition plans.

All these proposals are clearly against the spirit of the legislation, which were already weakened under lobbying during the legislative process. Evidence, even from the European Commission, has shown that companies do not comply with voluntary measures. Instead, strong and binding rules are necessary to make them accountable and to protect workers.

The transport sector is particularly affected by large companies that abuse subcontracting and long supply chains. This legislation previously sent a clear signal that workers’ rights and corporate accountability must be taken seriously. The Omnibus package is now sending the opposite message: that companies can continue business as usual at the expense of workers and the planet.

ETF regrets that, despite warnings from trade unions and opposition from responsible businesses and investors, the Commission is persisting with this proposal which was developed through an opaque and undemocratic procedure, led for and by the big business lobbies. Cutting back on the sustainability laws is not the solution to the structural problems of our economy but a dangerous backtracking on fundamental European values.

The proposals will now be submitted to the European Parliament and the Council for their consideration and adoption. ETF calls on MEPs to finding a compromise without lowering standards.