ESG Compliance Still Matters Despite the EU’s Omnibus Proposals

According to a Jenner & Block blog, the EU’s Omnibus Proposals have generated uncertainty about their impact on companies that must comply with European regulatory obligations. The proposals include multiple amendments to the EU’s Corporate Sustainability Due Diligence Directive and Corporate Sustainability Reporting Directive. While the proposals haven’t yet been adopted, companies must continue to adhere to existing regulations.

The Omnibus Proposals are divided into two directives. Omnibus Directive I suggests substantive revisions to CSDDD and CSRD, while Omnibus Directive II concerns the timing and scope of their implementation. Omnibus Directive II has been approved by the European Parliament and will become law after it is formally approved by the European Council. Omnibus Directive I, however, is still under negotiation, and divergent political perspectives may delay or reshape its adoption. 

Even if adopted, the proposed amendments will not significantly ease company obligations. Companies operating in the EU already carry out due diligence and reporting obligations under similar laws requiring them to address human rights and environmental concerns within their supply chains. The Omnibus Proposals would eliminate a uniform EU-wide standard for civil liability resulting from failure to comply. Companies that don’t comply would instead face liability under existing applicable national laws.

While the proposed changes may be perceived as deregulation, companies remain subject to the obligations in the original legislation. Companies competing for public contracts must continue to implement ESG policies to safeguard their eligibility despite any potential regulatory changes. Inaccurate or misleading ESG claims, such as greenwashing or bluewashing, could trigger fraud charges and lead to exclusion from public contracts. 

Even in the absence of strict regulatory mandates, businesses continue to face considerable legal and reputational exposure if they fail to meet ESG standards. Robust ESG compliance remains essential for legal, commercial, and reputational resilience.