Three months since the European Commission released its Omnibus proposals, uncertainty remains and critical questions continue to emerge. While more and more stakeholders weigh in on the Omnibus debate, companies continue to navigate complex ESG risks in global value chains.
What has been happening
There has been a lively debate following the announcement of the EU Commission’s Omnibus proposal, with many stakeholders taking a stance. Let us bring you up to speed on some of the key developments:
- Business associations across Europe have broadly welcomed the proposal, citing the reduced scope, simplified obligations and the stop the clock mechanism as steps that offer legal certainty and ease compliance burdens.
- In contrast, sustainability-focused initiatives such as amfori and the Ethical Trading Initiative have raised concerns. They argue the proposal departs from a risk-based approach and risks weakening alignment with international standards, including the UN Guiding Principles and OECD Guidelines. [1]
- Civil society groups have mobilised against the proposal, warning that it threatens to dilute the Green Deal and roll back corporate accountability. Concerns over a lack of transparency and consultation have led to a formal investigation by the European Ombudsman. [2]
- Furthermore, the EU Ombudsman has received three complaints in recent months concerning the Commission’s compliance with legal requirements in the context of the Omnibus proposal, its Better Regulation Guidelines and further rules in preparing legislative proposals. The EU watchdog has now officially opened an investigation into this complaint .
- The European Central Bank has also weighed in, cautioning that excessive simplification could undermine the effectiveness of the EU’s sustainability framework and introduce systemic financial risks. [3]
- Meanwhile, leading financial voices are raising the bar. Norges Bank Investment Management (NBIM), the world’s largest sovereign wealth fund, now expects all 9,000+ companies in its portfolio to meet significantly higher sustainability standards. These include board-level oversight, science-based targets for climate and nature, human rights due diligence aligned with the UNGPs and OECD, and transparent, forward-looking reporting in line with frameworks such as #ESRS, #GRI and #TCFD.
These expectations are, what the Omnibus proposal is trying to delay or weaken. It seems like the financial market wants to set the tone and the market will follow.
A holding pattern, not a halt
Some companies are reassessing their compliance strategies, particularly those newly or marginally in scope. But it would be inaccurate to say activity has stopped. What we’re seeing is a divergence:
- Global firms with mature ESG strategies are pushing ahead. For them, this isn’t about compliance – it’s about resilience, reputation, and staying aligned with international standards. They seem to be more frustrated about a potential delay or arising patchwork of regulations across the EU.
- Others are pausing, unsure how best to proceed without confirmed timelines or final wording. This hesitation has been reinforced by the EU’s adoption of the stop the clock directive, which delays key CSRD and CSDDD requirements. [4]
This uncertainty is prompting caution – not retreat – especially where reputational or investor risk is high.
The drivers that haven’t gone away
Even as EU policy appears to soften, the pressures behind human rights and environmental due diligence (HREDD) remain. For many organisations, regulation is only one part of the equation. A complex mix of internal, commercial and geopolitical forces continues to shape and sustain activity.
- Internal culture and employee expectations. Teams increasingly expect their companies to demonstrate meaningful progress on sustainability and human rights.
- Client and investor requirements. Due diligence is now embedded in many commercial relationships, especially within supply chains (see investors expectations by Norges Bank Investment Management).
- Issue-specific legislation. Laws such as the EU Deforestation Regulation (EUDR), the U.S. Uyghur Forced Labor Prevention Act (UFLPA), and Canada’s forced labour reporting requirements are creating new disclosure and compliance demands.
- Sustainability-linked finance. For companies with ESG-linked loans or reporting frameworks, due diligence directly influences financial and reputational performance.
- Evolving global risk landscape. Shifting trade policies, political instability and supply chain disruptions are amplifying ESG risks that businesses cannot afford to ignore, regardless of EU developments.
These drivers are not going away. Many organisations are choosing to maintain progress, even as the regulatory landscape becomes more uncertain.
What happens next?
The proposals are still under review and expected to undergo formal negotiation over the coming months
In the meantime:
- The European Parliament has published in June its draft report and the Council its 4th compromise text. [5]
- Lobbying from both business groups and civil society is expected to intensify
- Guidance on implementation is unlikely to emerge until after final confirmation
Trilogue to be held until the end of 2025, with a potential adoption in 2026 at the earliest.
Impact on CSRD- and CSDDD-relevant organisations
The shift in CSRD thresholds could see many companies fall out of scope, at least temporarily. But for those who have already invested in preparation, stepping back now could risk reputational damage or leave gaps in investor and client reporting.
The changes to the CSDDD could encourage due diligence strategies that go wide but not deep, focusing on formal engagement with all direct suppliers instead of applying risk-based approaches that direct attention where it is most needed. But this brings its own risks. In Germany, this has led to instances of companies sending out extensive due diligence requests and questionnaires to their entire supplier base in an attempt to comply with LkSG, creating a burden on both suppliers and companies. Without structured, ongoing engagement, organisations may miss signs of deeper issues in their supply chains and leave themselves exposed to future claims or scrutiny.
LRQA’s perspective - how we are supporting our clients
From our work with clients across sectors and regions, a few clear patterns are emerging:
- Navigating uncertainty. We are supporting clients to make informed, forward-looking decisions by helping them stay aligned with global expectations, even as EU timelines remain unsettled. While some organisations are slowing down, others are accelerating to maintain momentum and reduce long-term risk.
- Strengthening data credibility. We help companies improve the quality and assurance of their sustainability data. This is not only to meet regulatory requirements but also to give investors, customers and other stakeholders confidence in what is being reported (see ECBs opinion above) .
- Embedding strategic due diligence. The most resilient organisations treat due diligence as a strategic capability. We work with clients to move beyond reactive, compliance-led models and towards integrated approaches that deliver insight, resilience and long-term value.
- Taking a risk-based approach. We support companies in identifying and prioritising where action is most needed across complex supply chains. Using tools such as EiQ, our risk segmentation capabilities help focus resources effectively and enable appropriate, data-driven responses.
Conclusion
This moment is about more than a change in reporting scope or timing. It’s a test of how committed organisations are to the principles behind due diligence and sustainability.
Those that continue to invest in robust, risk-based approaches will be better placed to adapt – whatever the final outcome of the Omnibus process.
[1] amfori. Leading sustainability initiatives urge EU policymakers to consider adapting the Omnibus proposal for better risk management and worker and environmental protection. https://www.amfori.org/en/news/leading-sustainability-initiatives-urge-eu-policymakers-to-consider-adapting-the-omnibus-proposal-for-better-risk-management-and-worker-and-environmental-protection
[2] European Ombudsman. News document. https://www.ombudsman.europa.eu/en/news-document/en/205297
[3] European Central Bank. ECB Legal Opinion (CON/2025/10). https://www.ecb.europa.eu/pub/pdf/legal/ecb.leg_con_2025_10.en.pdf?330cb335ad9426cd4a64dbe4021597f1
[4] Council of the European Union. Simplification: Council gives final green light on the "stop-the-clock" mechanism to boost EU competitiveness and provide legal certainty to businesses. https://www.consilium.europa.eu/en/press/press-releases/2025/04/14/simplification-council-gives-final-green-light-on-the-stop-the-clock-mechanism-to-boost-eu-competitiveness-and-provide-legal-certainty-to-businesses/
[5] European Parliament JURI Committee. Draft report on the proposal for a directive of the European Parliament and of the Council. https://www.europarl.europa.eu/doceo/document/JURI-PR-774282_EN.pdf
