EU Commission’s ESG Reform Plan Under Legal Fire: Concerns Over Due Diligence Reductions
The European Ombudsman has initiated a formal investigation into the European Commission’s recent Omnibus proposals, which could significantly impact sustainability reporting and due diligence obligations for businesses operating within the EU. This inquiry follows a complaint filed by a coalition of NGOs, highlighting concerns about the Commission’s adherence to necessary procedures, including public consultations and comprehensive impact assessments.
Overview of the Investigated Omnibus Proposals
The Commission’s Omnibus I package, launched in February 2025, aims to streamline regulatory requirements across several critical frameworks, including:
- Corporate Sustainability Reporting Directive (CSRD)
- Corporate Sustainability Due Diligence Directive (CSDDD)
- EU Taxonomy Regulation
- Carbon Border Adjustment Mechanism (CBAM)
One of the most controversial aspects of this proposal is the suggestion to limit CSRD obligations to companies with over 1,000 employees and revenues exceeding €50 million. This change could potentially exempt up to 80% of firms currently subject to these regulations.
Concerns Raised by NGOs
The inquiry, spearheaded by Teresa Anjinho, is a response to complaints from several environmental and human rights organizations, including:
- ClientEarth
- Global Witness
- Friends of the Earth Europe
This coalition argues that the European Commission has not followed its own Better Regulation Guidelines, particularly by failing to conduct public consultations and neglecting to perform a climate consistency assessment as mandated by the European Climate Law.
Key Issues Identified in the Complaint
In a letter addressed to the President of the Commission, Anjinho noted that this is the third complaint received recently regarding the Commission’s legislative processes. She emphasized the importance of the issues raised, stating:
“It is clear that the issues raised in these three complaints raise a number of important issues for the Ombudsman.”
As part of her investigation, Anjinho has requested:
- A detailed explanation of why public consultation was bypassed.
- The extent of stakeholder engagement in February 2025.
- Justification for not conducting a climate consistency assessment.
- Clarification regarding the “urgency” cited in omitting a full impact assessment.
Response from the Coalition of NGOs
In reaction to the Ombudsman’s announcement, the coalition of eight organizations stated:
“This swift and decisive action by the EU Ombudsman underlines the importance of the issues raised in our complaint. The Commission’s rushed rollbacks of three key components of the Green Deal – including laws aimed at tackling the environmental and human costs of global value chains – has completely disregarded the rights of both people and the planet.”
The Implications of the Inquiry
This investigation is expected to intensify scrutiny over the EU’s ongoing efforts to ease regulatory burdens on businesses. As these initiatives often conflict with environmental and human rights objectives outlined in the broader Green Deal framework, the outcome of this inquiry could have significant implications for future policies.
For more information on sustainability reporting and related EU regulations, visit the European Commission’s sustainability reporting page.
