Potential amendment of the “EU Supply Chain Act” - EU Commission plans simplifications for companies as set out in the so-called Omnibus packages

The so-called “EU Supply Chain Act” (Directive (EU) 2024/1760, hereinafter: ‘Directive’ or “CSDDD”), which relates to the due diligence obligations of companies with regard to sustainability, came into force on July 25, 2024 (see the article on the Directive by Sven Tjarks and Stephan Fischer published on August 29, 2024). The directive is also known as the Corporate Sustainability Due Diligence Directive (CSDDD).

On February 26, 2025, the EU Commission presented the first so-called Omnibus packages which include a proposal to amend the Directive. In general, the Omnibus packages aim in particular to simplify the areas of due diligence obligations with regard to sustainability, reporting on sustainable finance, the EU taxonomy, European investment programs and the carbon border adjustment mechanism.

The following is an overview of the main changes planned by the EU Commission in relation to the Directive:

Simplification of certain due diligence obligations

• Companies within the scope of the Directive are obliged, among other things, to identify and assess actual and potential adverse impacts on human rights or the environment. This applies to the a company’s own business operations, those of its subsidiaries and, if these are linked to its chain of activity, those of its business partners. With regard to business partners, the EU Commission now proposes that the in-depth assessment to be carried out in this context shall only relate to direct business partners. A company shall only have to carry out an in-depth assessment in relation to indirect business partners in exceptional cases in the event of circumvention constellations or if plausible information on adverse effects is available.

• The EU Commission also intends to limit the trickle-down effect to direct business partners with fewer than 500 employees. In principle, no more information may be requested from such business partners as part of the risk assessment than that listed for sustainability reporting (see Art. 29a of directive (EU) 2013/34). The Commission's aim here is especially to protect medium-sized enterprises, which are not themselves subject to the CSDDD regulations, from excessive requests from large companies within the scope of the CSDDD.

• The EU Commission's proposal no longer provides for the obligation to terminate a business relationship with a business partner as a last resort to prevent or mitigate negative effects. Instead, companies would only be obliged to temporarily suspend the respective business relationship as a last resort. It is questionable whether this proposed amendment will gain a majority. Although the extensive requirements of the CSDDD (and the already applicable German Supply Chain Due Diligence Act (LkSG)) regarding the due diligence obligations to be carried out have been criticized, it is understandable that the termination of a business relationship must be the last resort in the event of proven breaches.

• It is also proposed that the regular assessment and monitoring of the appropriateness and effectiveness of the due diligence measures taken no longer has to be carried out by companies every five years, but only once every five years. However, the obligation to carry out ad hoc reviews must also be observed during this period.

Civil liability according to national rules and sanctions

• To date, the Directive provides for a uniform regime for civil liability. The EU Commission is now proposing to drop this approach so that civil liability would be governed by the respective national regulations of the member states.

• The EU Commission's proposal also no longer provides for special rules on litigation (i.e. litigation by third parties such as trade unions or non-governmental organizations).

• In connection with sanctions for CSDDD violations, it is planned to issue guidelines to support national supervisory authorities in determining the amount of sanctions. In addition, there would no longer be a provision on the maximum level of fines of at least 5% of the company's global net turnover.

Other significant proposed amendments

• The EU Commission’s proposal also provides for a harmonization of the requirements for transition plans that certain companies have to prepare under the directive regarding climate change mitigation with the requirements set out in the Corporate Sustainability Reporting Directive (CSRD).

• It is also proposed to delete the clause on checking whether financial services must be included in the scope of the Directive.

• The EU member states should have an additional year, i.e. until July 26, 2027, to transpose the Directive into national law. At the same time, the application of the due diligence obligations to the largest companies is also to be postponed by one year to July 26, 2028 (previously: July 26, 2027).

What should companies do now?

• The above-mentioned amendments to the Directive would especially lead to a considerable effort reduction for companies within the scope of the Directive. In this respect the European Commission's proposal fits in with the current trend towards less bureaucracy for companies. However, the European Parliament and the European Council must first decide on the EU Commission's proposals before they can come into force. Companies should therefore keep a close eye on whether and, if so, to what extent the Directive will be amended. The CSDDD is then likely to be implemented in Germany by amending the existing LkSG. 

• Irrespective of this, companies within the scope of the Directive should prepare themselves in good time and implement appropriate processes. In particular, an appropriate compliance/risk management system must be created or an existing system revised. In order to identify and prioritize any actual or potential adverse impacts on human rights or the environment, the company structure should be reviewed in advance (keyword: identification of location/product-related risks; management of own chain of activities, reduction/concentration of upstream/downstream business partners, if necessary). It is also recommendable to conduct training courses and to review and, if necessary, adapt the code of conduct, other company guidelines and contracts (such as general terms and conditions, sample contracts, etc.). In addition, the companies should take care at an early stage to obtain appropriate contractual assurances from relevant business partners regarding compliance with environmental and human rights standards and to reserve contractual (general and ad hoc) audit rights.

• None of this is entirely new: in fact, the LkSG already provides for comparable obligations. It remains to be seen whether any simplifications of the CSDDD will actually be taken into account in the LkSG: Art. 1 para. 2 CSDDD explicitly states that higher standards already in force in a country shall not be reduced by the CSDDD. It remains to be seen how this principle can be reconciled with slogans frequently used by politicians with regard to the LkSG, such as that this will be repealed.