CSDDD Omnibus Explained

1. What the Corporate Sustainability Due Diligence Directive actually covers

The Directive requires companies to identify, prevent, mitigate, and remediate:

Environmental (E) impacts

• Pollution
• Biodiversity damage
• Hazardous waste handling
• Climate-related impacts (including transition plans)

Social / Human Rights (S) impacts

• Forced labour
• Child labour
• Worker health & safety
• Exploitation in supply chains
• Community impacts

These are grounded in international standards like:

• United Nations Guiding Principles on Business and Human Rights
• International Labour Organization conventions

What about “G” (Governance)?

This is where confusion often arises.

CSDDD does not directly regulate “G” in the ESG sense (e.g. board structure, executive pay, shareholder rights).

However, it indirectly requires governance mechanisms, such as:

• Due diligence policies
• Risk management systems
• Oversight by management
• Integration into corporate strategy

 So:

• Governance is a means of implementation
• Not a standalone objective area

• Under the recent “Omnibus” discussions (driven by the European Commission to simplify sustainability legislation):

• The scope is being significantly narrowed
• A proposed higher threshold includes:
  • >5,000 employees
  • €1.5 billion net global turnover
• Non-EU companies are captured if they generate equivalent turnover within the EU

That reflects the policy direction: reduce burden by focusing only on the largest companies.

  This is NOT the original CSDDD scope
The originally adopted directive (before Omnibus revisions) had lower thresholds:

• 1,000+ employees
• €450 million turnover

  “Equivalent turnover within the EU” is key
For non-EU companies, the test is:

• Not global turnover
• But turnover generated inside the EU

This is consistent with how the EU applies extraterritorial rules.

  Status: still evolving
The Omnibus package is part of an ongoing legislative process. Depending on negotiations between:

• European Parliament
• Council of the European Union

…the final thresholds could still change.

Under the proposed Omnibus revision of the Corporate Sustainability Due Diligence Directive:

• EU companies → assessed on net global turnover (€1.5bn threshold)
• Non-EU companies → assessed on turnover generated within the EU (€1.5bn threshold)

So:

A non-EU company with €5bn global turnover but only €1bn in the EU → NOT in scope

EU companies are assessed based on global turnover, whereas non-EU companies are assessed only on turnover generated within the EU. This means that some large non-EU companies may fall outside the scope of the Directive if their EU turnover is below the threshold, even if their global turnover exceeds it. While this may appear more stringent for EU companies, it reflects the EU’s jurisdictional limits rather than a stricter regulatory intent.