Why the EU's Omnibus Regulation Sparks Supply Chain Debate

Regulation often walks a tightrope — too much can overwhelm businesses, but too little risks derailing sustainability progress.

The European Union (EU) is treading this line with its upcoming omnibus regulation package, designed to reduce the regulatory load on companies.

However, the move is raising concerns across the business landscape, especially regarding its potential impact on supply chain sustainability.

The Corporate Sustainability Due Diligence Directive (CSDDD) sits at the heart of this discussion. It requires companies to identify and address environmental and human rights risks within their supply chains.

Businesses aren’t opposed to the directive itself — they’re worried about the lack of clear implementation guidelines. Without these, companies face the risk of inconsistent application across the EU, which could disrupt supply chain operations and long-term sustainability strategies.

Major players including Unilever, Nestlé, Mars, Primark, DP World and Signify have all raised their voices.

In a joint letter, they argue: “The most practical step the European Commission can take to support future competitiveness is to focus on developing the clear and practical guidance needed to support businesses in implementing the CSDDD.”

Nicholas Mazzei, Vice President for Sustainability at DP World, reinforces this point: “What we in the business world want is clear implementation guidance from the commission and not the reopening of adopted legal texts for renegotiation.”

For companies with complex, global supply chains, this clarity isn’t just a preference — it’s essential for maintaining both compliance and competitive edge.

The push and pull of policy change

The omnibus regulation package is part of the EU’s broader strategy to boost economic competitiveness, shaped in part by the 2024 Draghi Report.

The report criticises Europe’s regulatory environment for being inconsistent and restrictive, stating: “Innovative companies that want to scale up in Europe are hindered at every stage by inconsistent and restrictive regulations. As a result, many European entrepreneurs prefer to seek financing from US venture capitalists and scale up in the US market.”

In response, the EU Competitiveness Compass was launched to simplify regulations and create a more business-friendly environment.

The omnibus package, scheduled for release on 26 February 2025, aims to streamline sustainability reporting across directives like the Corporate Sustainability Reporting Directive (CSRD) and the CSDDD.

Yet, not everyone is convinced this is a step in the right direction.

Andreas Rasche, Professor and Associate Dean at Copenhagen Business School, warns: “The EU Commission must look for a balanced and inclusive approach towards the omnibus.

"Nobody is arguing against simplifications if changes are proportionate. But changes to the scope and timeline of regulations like CSRD and CSDDD are not simplifications; they stand for a deregulation agenda that reflects political opportunism.”

Political voices within the European Parliament echo these concerns.

The Renew Europe group argues that deregulation could undermine the EU’s Green Deal objectives. Their position paper states: “Renew firmly believes that embracing the Green Deal in a market-driven approach is the only way to enhance our competitiveness and unlock genuine business opportunities. It will also strengthen our resilience against external shocks.”

Supply chain sustainability at a crossroads

At the centre of this regulatory tug-of-war is the supply chain. Companies rely on clear, consistent rules to maintain sustainable operations across borders.

Uncertainty about the future of directives like the CSRD and CSDDD makes it difficult for businesses to plan long-term strategies, invest in sustainable practices and ensure compliance.

Lara Wolters, Member of the European Parliament (S&D, NL), criticises the omnibus proposal as a reactionary measure: “The current omnibus approach is not good enough for Europe.”

She describes it as a “panic button” response, particularly from France and Germany, arguing that businesses need stability and certainty to make informed, strategic decisions.

Gwenaelle Avice Huet, Executive Vice President of Europe Operations at Schneider Electric, stresses the importance of forward-looking policies: “The way forward is clear: to keep driving momentum, we need to accelerate innovation and digitalisation.

"Now is the time to come together with united policy and simplified processes to clear the barriers to green growth.”

The debate over the EU’s omnibus package highlights a core dilemma: how to foster a competitive business environment without compromising sustainability goals. For businesses navigating the complexities of global supply chains, the stakes couldn’t be higher.

Regulatory decisions made in Brussels will ripple through procurement processes, sustainability strategies and supply chain management across Europe and beyond.

As Ursula von der Leyen, President of the European Commission, succinctly puts it: “The content of the laws is good, we want to maintain it and we will maintain it. But the way we get there, the questions we're asking, the data points we're collecting is too much, often redundant and often overlapping.”

For companies striving to balance compliance with growth, the outcome of this regulatory debate will shape the future of sustainable business in Europe.

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