EU Omnibus Leak: What It Means for Procurement and ESG

The EU’s upcoming simplification omnibus package has set off alarm bells in the sustainability and procurement communities. 

A leaked draft of the European Commission’s proposal suggests significant changes to corporate sustainability reporting, particularly affecting procurement teams managing complex supply chains.

Expected for full release on 26 February 2025, the proposal appears to scale back key elements of the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD).

If such changes are implemented, they could limit the sustainability data available to procurement professionals, weaken supply chain transparency and shift the regulatory burden for responsible sourcing.

What’s changing?

The leaked document indicates a move towards reducing compliance costs for businesses. Key changes include narrowing the scope of CSRD and CSDDD, limiting reporting requirements to only the largest companies. The draft also suggests restricting information requests along supply chains, which could impact procurement teams’ ability to assess environmental and social risks.

Andreas Rasche, Professor and Associate Dean at Copenhagen Business School, shared his concerns on LinkedIn: “This is very disappointing and not at all proportionate. The document gives no evidence-based reasons for the changes, and the process up to this point was neither transparent nor inclusive.”

Andreas further argued that while simplification is needed, deregulation is not the solution: “Yes, simplifications are needed and there are ways to make such simplifications, but what is suggested in this document does not simplify. It deregulates.”

For procurement teams, one of the most significant changes is the proposal to require due diligence only on direct suppliers, removing the expectation for companies to assess sustainability risks further down the supply chain. Additionally, sector-specific reporting standards are set to be scrapped, reducing the level of tailored ESG (environmental, social and governance) reporting required across industries.

Despite speculation, there is no mention in the leak of eliminating the “double materiality” principle, which requires companies to consider both their financial risks and environmental impact.

However, the CSRD’s implementation would be delayed by a year and apply only to companies with over 1,000 employees and €450m ($471m) turnover, aligning it with the revised CSDDD.

The leaked draft also outlines changes to the CSDDD, including reducing supply chain monitoring frequency from annually to every five years. Civil liability provisions would be removed, and financial institutions would no longer have due diligence responsibilities.

Why is the EU making these changes?

The push for regulatory simplification follows the Draghi Report, which in 2024 highlighted barriers to business growth in Europe.

The report stated: “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.”

To address these concerns, the EU Competitiveness Compass aims to simplify regulations across the Union.

Ursula von der Leyen, President of the European Commission, has defended the need for change: “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.”

However, a coalition of over 90 organisations, representing businesses, investors and civil society, has pushed back against weakening sustainability reporting. In December 2024, they issued a joint statement urging the EU to maintain the robustness of the CSRD while streamlining its implementation.

Impact on procurement and ESG strategy

If the proposed changes are finalised, procurement teams may face reduced access to sustainability data, making it harder to identify ESG risks in their supply chains. The shift to assessing only direct suppliers could create gaps in responsible sourcing efforts, particularly for industries reliant on complex global networks.

For businesses, this raises questions about balancing compliance with maintaining ESG commitments. Scaling back sustainability reporting could lead to short-term cost savings but might also increase reputational risks and reduce investor confidence in corporate ESG strategies.

María Mendiluce, CEO of the We Mean Business Coalition, warned of the broader risks: “What’s at stake is more than just regulatory fine-tuning - scaling back reporting requirements means losing vital insights into corporate risks and opportunities.

"Without comprehensive sustainability data, businesses, investors and governments will struggle to identify and address climate-related vulnerabilities, weakening their ability to drive resilience, innovation and long-term competitiveness.”

As the EU finalises its omnibus package, procurement professionals will need to stay alert.

The proposed changes could redefine supply chain sustainability expectations, shifting responsibility away from regulation and towards voluntary corporate action. The challenge now is ensuring that simplification does not come at the cost of transparency and long-term resilience.

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