Almost two years ago, the European Union embarked on the path of mitigating the impacts of business activities, which led to the adoption of Directive (EU) 2024/1760 on corporate sustainability due diligence (the “CSDDD”), which for the first time at Union level systematically regulated mandatory due diligence in the area of human rights and the environment across the value chain.
The original proposal contained very ambitious objectives which were unattainable for a number of entities. The response to the intense political and economic debate on the balance between sustainability objectives and the competitiveness of European enterprises was the adoption of the EU Omnibus I legislative package, which represents a set of measures aimed at simplifying and clarifying the adopted rules so as to reduce the administrative burden and disproportionate impacts, in particular on small and medium-sized entities in supply chains, without abandoning the basic concept of corporate responsibility for their impacts.
The key substantive pillar of the Omnibus I package is Directive (EU) 2026/470 (hereinafter the “Omnibus Directive”), which amends Directive 2006/43/EC (the “Audit Directive”), Directive 2013/34/EU (the Accounting Directive), Directive (EU) 2022/2464 (the “CSRD”, on which we published an article last week[1]) as well as the CSDDD. From a practical perspective, in relation to the CSDDD it is essential that it (i) confirms and effectively narrows the scope of obligated entities to the largest players, (ii) introduces maximum harmonization of key provisions, (iii) mitigates the regime of civil liability and sanctions, including a reduction of the upper limit of fines, (iv) simplifies certain procedural requirements, and (v) removes more ambitious elements of the original regulation.
Directive (EU) 2025/794 “stop-the-clock” as the first pillar of the package postponed certain obligations in light of the ongoing legislative changes. The second pillar, the Omnibus Directive, then brings a substantive intervention into the content of the obligations themselves, both in the area of reporting and in the area of due diligence. The changes relating to due diligence must be transposed by Member States by 26 July 2029.
New scope of the CSDDD: only the “largest” enterprises
One of the most important amendments is the increase of the thresholds for obligated entities. Article 2 of the CSDDD is amended so that it sets thresholds of, on average, more than 5,000 employees and a net worldwide turnover exceeding EUR 1,500,000,000 for EU enterprises. For selected franchise and licensing models, which have concluded agreements within the European Union ensuring a common identity, a common business concept and the application of uniform business methods, a due diligence obligation arises if their royalties in the last financial year exceeded EUR 75,000,000 and if the entities achieved more than EUR 275,000,000 net worldwide turnover. The above also applies to parent enterprises which reach these values on the basis of consolidated financial statements.
Analogously, for enterprises established under the law of a third country, the turnover in the EU and franchise and licensing royalties (EUR 1.5 billion / EUR 75 million / EUR 275 million) are set as triggers for obligations. The number of employees is not decisive for these enterprises.
Risk-based identification and limits on information requests in chains of activities
The Omnibus Directive amends Article 8 of the CSDDD so that the identification and assessment of adverse impacts arising from the enterprise’s own operations, the operations of its subsidiaries and the operations of its business partners is to take a two-step form. First, they carry out a preliminary assessment, based only on reasonably available information, thereby identifying the greatest risks, and based on the result of this assessment they carry out an in-depth assessment in areas where impacts are most likely and most severe.
Essential is the new paragraph 2a of Article 8, which directly limits what information enterprises may request from business partners during the in-depth assessment, only if it is necessary, and in the case of partners with fewer than 5,000 employees only where it cannot reasonably be obtained by other means. The Omnibus Directive further prioritises requirements towards partners with the highest likelihood of impacts and allows prioritisation of areas involving direct business partners.
Another relieving element is the express authorisation to use appropriate resources, including independent reports, digital solutions, sectoral and other initiatives or cooperation, in order to avoid duplicative provision of information.
As a significant return of competitiveness to European enterprises may be perceived the amendment concerning the prevention and cessation of adverse impacts. Newly, enterprises will not be obliged, without undue delay, to terminate business relationships with partners in relation to activities concerned where impacts could not be mitigated or eliminated by milder means (preparation of a prevention plan, ensuring contractual assurances in the supply chain, carrying out necessary investments and adjustments of internal processes, providing support to smaller business partners and possibly cooperation with other entities). They shall only refrain from entering into new relationships and expanding existing ones or may temporarily suspend them.
The entity should, without undue delay, strengthen the plan of preventive measures. If it can reasonably be expected that such a strengthened plan will be effective, the entity may continue cooperation with the business partner and at the same time is not exposed to the risk of sanctions or civil liability. At the same time, the enterprise shall carry out a kind of proportionality test as to whether the suspension of the relationship would cause even worse impacts than the problem it seeks to address by suspension. If the impacts of suspending the business relationship would be worse, the entity is not obliged to suspend the relationship and continuing in it does not expose it to sanctions. However, it must be able to duly justify this to the supervisory authority.
The business relationship must continue to be monitored and the decision not to suspend it must be reviewed, as well as further appropriate measures to mitigate risks must be adopted.
Abandonment of the climate transition plan
The original legislation imposed on enterprises the obligation to adopt and implement a transition plan for climate change mitigation, the aim of which was to ensure that their business model and strategy were compatible with the transition to a sustainable economy and with the objective of limiting global warming to 1.5 °C. This plan was to include in particular the enterprise’s climate targets for 2030 and further for 2050, a description of decarbonisation measures, planned investments and a definition of the role of management bodies in its implementation. Enterprises were also obliged to regularly update the plan and inform about progress in achieving the set objectives.
The Omnibus Directive expressly states that the provisions on the transition plan for climate change mitigation are considered disproportionate and are to be repealed, as they could also lead to legal uncertainty.
Monitoring: periodicity at least once every five years
The Omnibus Directive reduces the frequency of regular monitoring to at least once every 5 years (from the original frequency of once per year), while maintaining the obligation to carry out an assessment without undue delay after a significant change or where there is reasonable suspicion that the measures are not appropriate and effective.
Sanctions and civil liability: cap of 3% and greater role of national law
Furthermore, the sanctioning part is amended so that it reduces the upper limit of pecuniary sanctions to 3% of net worldwide turnover (or, in the case of groups, 3% of the consolidated turnover of the ultimate parent enterprise) from the original 5%, and at the same time emphasises that net turnover is to be one of the factors, not an automatic calculation base for the sanction.
Civil liability is linked to national law. If an enterprise is found liable under national law for damage caused by a breach of due diligence, the right to full compensation must be ensured (it should not be punitive or liquidatory amounts). At the same time, it is expressly stated that enterprises may be held liable even if they used a third party to verify due diligence obligations. The civil liability of business partners remains unaffected.
Dates of application: postponement to 2029 and related Commission guidance
The Omnibus Directive provides that the Commission is to adopt general guidelines on due diligence by 26 July 2027 and at the same time the date of application of the CSDDD for all enterprises is to be postponed to 26 July 2029. This is also specified by an amendment to Article 37 of the CSDDD. Member States are to adopt transposition measures by 26 July 2028.
Conclusion
Within the CSDDD, obligations are shifting towards the largest enterprises (5,000 employees and EUR 1.5 billion / royalties exceeding EUR 75 million and net worldwide turnover exceeding EUR 275 million), monitoring is adjusted, the sanctioning framework is set at a maximum of 3% of net worldwide turnover, as well as certain key instruments such as the removal of climate transition plans, while the Directive at the same time establishes a partially harmonised core of due diligence with the aim of preventing so-called gold-plating[2] of obligations and postpones application until 2029.
The Omnibus I legislative package represents a significant correction of the originally very ambitious framework of due diligence under the CSDDD. The adopted changes primarily narrow the scope of obligated entities, strengthen the principle of proportionality in the fulfilment of individual obligations and adjust certain key instruments, such as monitoring, sanctions or the regime of civil liability.
For many enterprises, the current development may represent a certain relief, especially with regard to the postponement of implementation and the mitigation of certain procedural requirements. At the same time, however, it must be emphasised that the basic concept of mandatory due diligence remains preserved. The CSDDD continues to represent a fundamental regulatory instrument aimed at ensuring that large enterprises systematically identify, prevent and mitigate negative impacts of their activities on human rights and the environment within their own operations as well as value chains.
From a practical perspective, enterprises should primarily (i) assess whether, after the adoption of the changes, they still fall within the scope of the CSDDD, especially with regard to the adjusted thresholds and the implementation timeline, (ii) if they have already started preparations for the introduction of due diligence processes, continue in their systematic setting, in particular in the area of risk identification in the supply chain, (iii) use the additional time to create internal policies, codes of conduct and contractual mechanisms for the management of ESG risks, (iv) take into account the impacts of the CSDDD on contractual relationships with business partners, especially in the area of contractual assurances and control mechanisms, and (v) continuously monitor further developments of European legislation and methodological guidance, which may further specify the practical application of the Directive.
From the perspective of business practice, it can be expected that issues of responsibility for the impacts of business activities in value chains will continue to play a significant role not only from the perspective of obligations, but also from the perspective of reputation, financing and relationships with investors or business partners. The Omnibus Directive therefore does not represent a weakening of the European sustainability initiative, but rather its less burdensome implementation, which aims to ensure that due diligence obligations are feasible for enterprises and at the same time effective.
[1] https://www.peytonlegal.cz/omnibus-i-a-reporting-udrzitelnosti-zmirneni-pravidel-csrd/
[2] A situation in which a Member State, in the process of implementing an EU Directive into its national law, imposes stricter or broader rules than the Directive itself requires.
Mgr. Jakub Málek, managing partner – malek@plegal.cz
Mgr. Martin Zavadil, junior lawyer– zavadil@plegal.cz
Ráchel Kouklíková, legal assistant – kouklikova@plegal.cz
23. 4. 2026