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ClientEarth Communications

16th December 2025

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CSDDD after the Omnibus I: legal risks, maladministration, and the future of due diligence

As the Omnibus I package is about to be formally adopted, experts Anaïs Berthier (Head of ClientEarth Brussels Office), Quentin Mautray (Lawyer at ClientEarth), Professor Andreas Rasche (Copenhagen Business School), and Professor Alberto Alemanno (HEC Paris/The Good Lobby) answered three salient questions surrounding what is a very contentious law that continues to sparkle debate, uncertainty, and confusion:

Maladministration: What are the consequences of the Ombudsman’s finding in the making of the Omnibus I on the cohort of other initiatives to “simplify” sustainability laws?

Legal fragility: What are the challenges faced by Omnibus I and subsequent omnibuses?

Corporate compliance: How can companies that already started their transition and compliance efforts with the CSDDD continue going forward?

Recap 2026: what is the Omnibus I package?

The Omnibus I (or "Omnibus package") was proposed by the European Commission in February 2025. Officially presented as a "simplification" initiative, its stated goal was to cut red tape and reduce the administrative burden on EU businesses to boost global competitiveness.

However, legal experts define it as an "unprecedented deregulation agenda." Its primary impact was the retroactive revision of two landmark sustainability laws before they were even fully implemented:

CSDDD: The Corporate Sustainability Due Diligence Directive.

CSRD: The Corporate Sustainability Reporting Directive.

Beyond these, the Commission has since introduced further "Omnibuses" targeting Chemicals, Food & Feed, and the Environment, signaling a broader roll-back of the European Green Deal.

Key changes at a glance: The CSDDD under the Omnibus I

Company scope: Thresholds increased to 5,000 employees and €1.5 billion turnover (down from ~16,000 to ~1,100 companies).

Climate transition plans: Substantive obligation to implement plans was deleted from the CSDDD.

Review cycle: Due diligence reviews extended from 1 year to every 5 years.

Civil liability: The harmonized EU regime was removed, leaving a patchwork of 27 national laws.

Legal status: Finding of maladministration by the European Ombudswoman (Nov 2025).

The Ombudsman’s verdict: maladministration in the making of Omnibus I

In making the Omnibus I, the Commission chose to ignore several key procedural safeguards found in the EU constitutional Treaties, the Commission’s Better Regulation Guidelines and the European Climate Law:

  • It did not carry out an impact assessment.
  • It did not consult relevant stakeholders, but instead met mostly with certain (not all) industry lobbies behind closed doors.
  • There is no proof that it conducted a climate consistency assessment.

These rules are not just about procedure. Impact assessments are the tools that guarantees the quality of our laws, by ensuring that they are built on objective evidence rather than ideology and designed to deliver the policy objectives that they pursue. Public consultations of stakeholders are what guarantees the effective exercise of the fundamental democratic principles constitutionally protected by the EU Treaties and contribute to the quality of our laws, by gathering a wide range of views and expertise from diverse stakeholders and experts. Climate consistency assessments ensure that our laws enable the EU to achieve climate neutrality by 2050. 

For these reasons, the European Ombudsman, an independent institution of the EU that holds the other EU institutions to account, investigated the Commission’s making of the Omnibus I. On 25 November 2025, the Ombudsman decided that the Commission committed maladministration: the Commission sidestepped the impact assessment and public consultation required for the preparation of the Omnibus I, which did not comply with the minimum requirements of a transparent, evidence-based and inclusive lawmaking process. The comprehensiveness of the evidence supporting the Omnibus I was seriously questioned and the Commission was pinned down for its failure to ensure an open, broad and balanced consultation of all relevant stakeholders. 

EU Green Deal rollback: why the Omnibus I is deregulation, not simplification, and it's costly

These Omnibus "simplification" proposals are not designed to merely simplify the legal framework for companies; they are straight out attempts to delete or significantly weaken existing environmental standards in the EU. It is an unprecedented deregulation wave aimed at dismantling the legal framework adopted under the European Green Deal, and more broadly the very foundation of EU environmental law. As such, this deregulatory trend is threatening to cut the roots of our European model, built on the necessity to have a safe and healthy environment for its citizens and businesses to thrive. 

This is despite the acceleration of extreme weather events and Europe being the fastest warming continent on the planet. This is also despite the cost of environmental inaction absent strong environmental laws significantly outweighing the cost of action supported by a robust legal framework.

The hidden economic cost of inaction against the climate crisis

Over half of global GDP, approximately 40 trillion EUR, depends on nature. Lack of enforcement of EU environmental legislation costs the EU’s economy around EUR 180 billion each year. The economic cost of staying within the two degrees global warming limit is 6 times lower than paying for inaction on climate change. This is because a healthy climate and environment is the bedrock that allows companies to carry out their business. Accordingly, biodiversity loss and ecosystem collapse is deemed one of the greatest risks for the economy for the next decade. Likewise, global ecosystem degradation and collapse has recently been stressed as a major threat to national security and prosperity.  

Policy consequences: why the Omnibus I may not deliver on competitiveness

The flaws in the making of the Omnibus I proposal have concrete consequences on the final law. 

First, the lack of meaningful consultation led to regulatory capture of the Omnibus I preparation by a limited group of corporate interest that does not represent all of the EU’s society and businesses: an analysis reveals a striking alignment (70%) between the demands made by a small number of very large trade associations and the final Omnibus I proposal. This raises legitimate concerns about the integrity and independence of the Commission’s decision making, but also whether the Omnibus really serves the interest of all European companies. 

Secondly, the absence of impact assessment, climate consistency assessments and public consultation means that there is no evidence to guarantee that the Omnibus I will deliver what it promises:

  • No assurance that the Omnibus I preserves the environmental objectives of the CSDDD – quite the opposite.
  • No evidence that the amended CSDDD will effectively help European competitiveness as pledged.

Professor Rasche stressed that the competitiveness arguments with regard to the Omnibus I are over exaggerated and, in the long run, the deregulation agenda will be more a burden that we need to deal with than a boost for EU industry’s competitiveness.

In fact, the end result of the Omnibus I is a directive that on many levels creates more complexity and uncertainty for companies that will have to brace themselves against new legal risks. Marginally saving compliance costs (on due diligence or corporate reporting for example) does not make companies more competitive. As indicated in the 2024 “Draghi Report”, the true causes of companies’ lack of competitiveness lie elsewhere, in matters such as high energy prices, shortage of labour or missing digital and physical infrastructure. 

Legal consequences: uncertainty, risks and court challenges to the Omnibus I 

It is no mystery that multiple stakeholders in civil society and industry, as well as business associations, are exploring the possibility of litigation to challenge the legality of the Omnibus I before the Court of Justice of the EU (CJEU). 

Legal experts have warned (here, here, here, here, and again here) that the Omnibus I could be held invalid in several aspects. Regarding the way in which it was made, based on the conclusions of the Ombudsman in its decision of November 2025, procedural breaches that affect the legality of the Omnibus I could be found by the CJEU. In addition, the content of the Omnibus I may itself violate EU law. For example, the deletion in the CSDDD of the obligations related to climate transition plans may be found to violate the Charter of Fundamental Rights of the EU. 

More broadly, a successful challenge would establish a critical precedent to halt the Commission’s trend of using of omnibus laws as vehicles of deregulation without impact assessment, public consultation and climate consistency assessment. 

But this situation also creates opportunities and risks for companies. It creates opportunities for responsible companies who already started their compliance efforts on the assumption that the original CSDDD would enter into force. They could bring legal action by challenging directly or indirectly the Omnibus I in court. It creates risks for companies that will opt for minimal compliance with the CSDDD as amended by the Omnibus I. 

The danger of a retroactive compliance gap

Law Professor Alberto Alemanno warns of the risks that if it is held invalid, the Omnibus I could become void and the CSDDD may be reinstated in its original, pre-Omnibus form. This would have serious consequences. For example: the initial company scope of the CSDDD would be reinstated, with many companies becoming again subject to the directive’s obligations, the obligation for companies to adopt and implement climate transition plans would be resurrected, etc. 

The legal fragilities of the Omnibus I therefore generates a situation of significant unpredictability for companies, who will have to operate in an unstable legal environment for the next couple of years. 

Business consequences: legal complexity of the Omnibus I and market fragmentation 

The changes brought by the Omnibus I to the CSDDD generate additional risks and complexity for companies. A few examples:

  • Misalignment with strategy: The reduction of scope of the CSDDD sends the wrong message that due diligence is only for the largest companies. Most businesses, no matter the size, have risk-based sustainability strategies, and due diligence, as a risk-based process, plays a key part in this. Losing the legal mandate to engage in due diligence is counterproductive.

  • Greenwashing risks: While the CSRD still imposes reporting obligations for climate transition plans, the Omnibus I deletes from the CSDDD the obligation to implement them. This introduces uncertainty and raises serious greenwashing legal risk for companies that report a plan but fail to act. Moreover, despite the Omnibus I, due diligence must still focus on climate matters. So, companies are obliged to identify and address their impacts on the environment linked to emissions in their chains of activities. Despite the Omnibus I, due diligence must still focus on climate matters. 

  • International conflict: Extending the due diligence review cycle from 1 to 5 years creates misalignment with international standards, which consider due diligence as a continuous process, and exposes companies to liability risk.

  • The liability patchwork: The deletion of the EU-wide harmonised civil liability regime for companies in breach of their due diligence obligations puts up practical problems: EU Member States will adopt their own regimes, exposing companies to different liability conditions and risks in different jurisdictions, and going against any claim of simplification.

Next steps: what can your company do to protect itself from the Omnibus I and CSDDD uncertainties?

Smart compliance: a strategic path for responsible businesses complying with the CSDDD

Smart compliance is voluntary compliance with the CSDDD even absent an obligation to do so. For example, it means that a company can choose to comply with the due diligence standards set in the CSDDD even if it falls outside its scope of application as a result of the Omnibus I revision. It also means that a company can adopt and implement a climate transition plan even though this obligation in the CSDDD was deleted by the Omnibus I. 

Why smart compliance with the CSDDD is strategic

Smart compliance can benefit companies who face a number of expectations from their stakeholders, business partners, banks and investors that need to manage their risks. This risk management imperative is where the demand for corporate due diligence comes from. 

Smart compliance is also about value drivers. While compliance is obviously required, the values of a company play an important role. Due diligence can be considered strictly speaking as a risk management system and has a lot to do with strategic management. But engaging (or not engaging) in due diligence only from the angle of compliance may not be enough to drive a company’s values. Value drivers matter because due diligence allow companies to identify risks that they had not spotted before and to thereby stick to their values. 

Finally, smart compliance allows companies to protect themselves against the business and liability risks stemming from the Omnibus I [link to point 5] and the prospect of the original CSDDD being reinstated following a legal challenge of the Omnibus I [link to point 4]. 

Recommendations:
  1. Responsible companies should engage in smart compliance and apply the due diligence standards set out in the CSDDD even if they do not fall within the scope of the directive because of their number of employees and/or turnover.

  2. Despite the deletion of the obligation to adopt a climate transition plan in the CSDDD, responsible companies (whether or not they fall within the scope of the CSDDD) should adopt and implement such a plan for adapting their business modal and strategy to the transition to a sustainable economy within the limiting of global warming to 1.5°C. This plan should contain scope 1 to 3 greenhouse-gas emission reduction targets, a description of the decarbonisation levers identified and key actions planned to reach these targets, as well as an explanation and quantification of the investments and funding supporting the implementation of the transition plan. 
Advocacy: how transitioning companies can reclaim the narrative post Omnibus I

The Ombudsman’s decision is a call for the Commission to correct course. Yet, the same flaws in the preparation of the Omnibus I are being repeated in the fleet simplification initiatives announced or already proposed by the Commission (such as the EU Deforestation Regulation, the Chemicals Omnibus, the Environmental Omnibus and the Food & Feed Omnibus). The same causes having the same effects, the risk is that these reforms will also generate laws that are not fit for purpose and face legal risks. 

Recommendations:
  1. The Commission needs a strong signal that it must go back to being a sensible lawmaker that operates within the boundaries of the law. Responsible companies must stand up and raise their voice to make sure of this.
    They can do so by actively engaging with policymakers in the Commission, the European Parliament or their national governments to make their opinion known. They should ask the Commission to be consulted on announced legislative proposals to revise sustainability laws and require it to carry out thorough impact assessments and climate consistency assessments. Companies who support existing sustainability laws should be vocal about it – or face the risk of being overshadowed by companies who oppose them.

  2. Responsible Companies should make their voice heard individually or as part of pro-sustainability trade associations when they can and should not always trust that their general or sectoral business associations will necessarily speak on their behalf. Research shows that trade associations have been more oppositional of strong sustainability laws than their individual members and reflected the positions of their less progressive members. Responsible companies who feel that their position is not well represented by their trade association can: 

  • group together and form networks to amplify their voices or join existing progressive business associations; 

  • make their disagreement with the positions taken by their trade associations public (for example through caveat added to statement made by their trade association, indicating the aspects with which they not agree, or through separate statements sent to policymakers).