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The European Parliament’s adoption of its negotiating position on the Omnibus I package marks a major milestone towards a simpler, more consistent and workable sustainability reporting and due diligence framework for companies operating across the Single Market. The final text, however, fails to reflect the concerns of third-country stakeholders and international businesses over extraterritorial effects.

The framework’s implementation risks creating legal uncertainty for global businesses and conflicts of law in different jurisdictions, thereby undermining the diversification of supply chains and chilling investment in the EU. Limiting the scope of the initiatives to an EU Nexus – in other words, making them apply only to those global supply chains directly linked to the EU market – will be critical to achieving sustainability and competitiveness goals.  

The Omnibus I is part of a wider agenda dedicated to improving the competitiveness of the EU’s economy. The Draghi report clearly outlined the pressing urgency of addressing Europe’s competitiveness challenges as a precondition for the EU realising its wider strategic objectives. Europe must act urgently to strengthen its economy and this can only work with ambitious simplification efforts. This imperative should transcend party political lines.  

As the Omnibus I now enters into trilogue discussions, policymakers must secure a strong mandate to improve the EU’s business environment.

While the European Parliament’s decision to return the first simplification package on the CSDDD and the CSRD to plenary introduces further delays for Europe’s sustainability agenda, recent progress in Omnibus I reflects meaningful steps toward a more proportionate framework. Yet major concerns remain unresolved, as set out in our reaction to the report adopted by the JURI Committee. The extraterritorial reach of both directives risks creating conflicting legal obligations for companies with international footprints. This is not only a matter for US-based companies, but for all businesses with international footprints that may be subject to overlapping or conflicting legal obligations in jurisdictions outside the EU. Read more in the recommendations we’ve set out on what remains to be done if the EU wants to make these frameworks effective and workable for all.

The adoption of the Omnibus report by the European Parliament’s Legal Affairs (JURI) Committee is a critical milestone for the EU simplification agenda. This signals the EU’s ongoing efforts to simplify the regulatory landscape and foster a more business-friendly environment, ensuring that legislation remains clear, consistent and practical for companies operating in Europe.

However, key concerns remain. In particular, the issue of extraterritoriality has yet to be adequately addressed. The current provisions risk creating significant legal and operational challenges for companies with global operations and supply chains that extend beyond the EU. This is not only an issue for US-based companies, but for all businesses with international footprints that may be subject to overlapping or conflicting legal obligations in jurisdictions outside the EU.

Moreover, we regret the continued inclusion of transition plans within the Corporate Sustainability Due Diligence Directive (CSDDD) as it creates unnecessary overlap with the Corporate Sustainability Reporting Directive (CSRD) and legal risk. Indeed, the CSRD already defines necessary standards for transition plans.

Policymakers must tackle these remaining issues during the upcoming trilogue negotiations to ensure a balanced, proportionate and globally coherent framework that supports both sustainability and competitiveness.