OMNIBUS PACKAGE

On February 26th, 2025, the European Commission published the Omnibus package.

The proposal aims to streamline and simplify sustainability regulations by introducing significant adjustments to three key directives: the Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD), and the EU Taxonomy. The European Parliament and EU Council will discuss this proposal before its finalization and adoption. If passed, the Omnibus package could take effect within a year; if the debates stall, the current laws will remain in place until 2027.

What are the main changes the Omnibus package is bringing?

CSDDD:

• More time for companies to implement the framework: full application moved from July 2026 to July 2028.
• Limited scope of application: only first-tier suppliers, excluding deeper tiers.
• Simplification of due diligence requirements.
• Reduced frequency of supplier monitoring: from annual to once every 5 years.
• Civil liability: removed at the EU level, leaving national laws to determine whether their civil liability provisions override the applicable laws of third countries where harm occurs.
• Climate transition plans no longer mandatory.
• Deletion of the review clause on inclusion of financial services.

CSRD:

• Changes in implementation: large companies report from 2027, listed SMEs from 2028 (previously due in 2026).
• Adjustment in companies' threshold: reporting for companies with 1,000+ employees (previously 250+) and turnover exceeding EUR 50 million. Non-listed SMEs are exempt but may report voluntarily using simplified standards.
• Sector-specific standards delayed to mid-2026.

EU Taxonomy:

• Adjustment in companies' threshold: reporting voluntary for companies with more than 1,000 employees (previously 250+) and turnover not exceeding EUR 450 million.
• Simplified technical screening criteria to ease compliance.
• Greater alignment with global standards (ISSB, GRI).

What are the implications of these changes for the garment industry?

The adjusted company thresholds exclude over 80% of previously covered companies from sustainability reporting obligations. This significantly impacts the garment industry, which is highly fragmented by nature. For effective management of adverse impacts and risks in the garment and footwear sector, most businesses should fall under the Omnibus package's scope. Moreover, since many risks in the garment industry originate in deeper supply chain tiers, companies must examine their entire supply chains regardless. The reduced scope undermines the level playing field, removes compliance incentives, and disadvantages companies that already conduct due diligence and maintain relationships with deeper-tier suppliers.

While CSDDD currently prohibits companies from shifting due diligence obligations to suppliers, the new Article 8, b. (2a)1 appears to encourage companies to seek contractual assurances from direct business partners to ensure Code of Conduct compliance and extend this to indirect business partners.

In summary, while the Omnibus package aims to simplify corporate sustainability requirements, it risks shifting responsibility down the supply chain, enabling greenwashing, and weakening corporate accountability. The challenge for co-legislators is to achieve a balance between simplification and maintaining robust sustainability due diligence.