Omnibus I package aligns with the CSDDD and CSRD

The Corporate Sustainability Due Diligence Directive (CSDDD) requires companies to identify and, where possible, prevent adverse impacts along their supply chains. However, the Omnibus I package amended and weakened this once-groundbreaking directive. The due diligence obligations now apply only to companies with a net turnover of at least 1.5 billion euros and more than 5,000 employees. Penalties for companies have also been reduced: the maximum fine is now three per cent of global net turnover, down from the previous minimum of five per cent. Companies are also now only required to evaluate the measures they have put in place every five years, rather than annually. The obligation to draw up and implement a climate action plan has also been removed. EU Member States must implement the CSDDD by 26 July 2028; for businesses, the new rules will apply from 26 July 2029.

The Omnibus I package also weakened the Corporate Sustainability Reporting Directive (CSRD). The Directive broadens existing non-financial reporting requirements to encompass all environmental, social and governance (ESG) aspects and mandates external audits of companies’ sustainability reports. The development of the European Sustainability Reporting Standards (ESRS) has also established uniform guidelines for sustainability reporting, enabling better comparisons between companies. However, the Omnibus I package has significantly narrowed the scope of companies covered by the directive. In future, reporting requirements will apply only to companies with more than 1,000 employees and net turnover exceeding €450 million. As a result, around 80 per cent of companies are excluded from the directive’s original scope. The Omnibus I package also postpones reporting obligations by two years for companies not yet subject to them.

Battery and Methane Regulations: Delays enacted or proposed

The EU Battery Regulation aims to ensure that batteries are managed sustainably throughout their entire life cycle. End-of-life batteries containing critical and strategic raw materials, such as lithium or nickel, must be recycled and reused to high standards. Consumers must be able to remove and replace portable batteries. Manufacturers must therefore establish due diligence strategies and have them audited by an independent body. However, under the Omnibus IV package, a regulation adopted in July 2025 postponed the due diligence obligations by two years, to 18 August 2027. It also added more product categories to the list of exemptions.

The Methane Regulation requires operators of fossil fuel energy infrastructure to measure and reduce methane emissions. Because most fossil fuels come from outside the EU, the measure aims to favour imports with low upstream emissions. From 2027, importers would have had to show that foreign producers monitored methane emissions in line with EU guidelines and standards. Despite increasing pressure, the EU Commissioner responsible, Dan Jørgensen, initially refused to reopen the regulation. Due to legal risks associated with the procurement of oil and gas, in July 2026 the Commission published only a recommendation explaining how importers could meet their obligations, whilst at the same time recommending that sanctions be suspended until 2029. However, citing the tense situation on the energy markets, the European Commission has yielded to pressure and, on 14 October 2026, proposed a one-year postponement of key parts of the Methane Regulation.

EU Deforestation Regulation: Lobbying weakens the rules

At the heart of the Deforestation Regulation (EUDR) is the requirement for companies to exercise due diligence, particularly by tracing products back to their production site. Products placed on or exported from the EU market must not contribute to deforestation or forest degradation. The Regulation applies to timber, cocoa, soya, palm oil, coffee, rubber and cattle, as well as their derived products. However, the date on which the regulation comes into force has been postponed from the original end of 2024 to 30 December 2026 for large and medium-sized enterprises, and to 30 June 2027 for small enterprises. In principle, only companies that first place products on the market must now submit due diligence statements. Micro and small primary producers in low-risk countries are exempt from the standard due diligence declaration and need only file a one-time simplified declaration. This exemption applies to a large proportion of European and almost all Austrian agricultural and forestry holdings.

Prohibiting products made with forced labour on the Union market

From 14 December 2027, products made with forced labour will be banned from the EU market products made with forced labour will be banned from the EU market. Member State authorities and the European Commission must investigate suspicious goods, supply chains and manufacturers. The Forced Labour Regulation places no due diligence requirements on businesses. The Regulation is nevertheless expected to create a strong incentive for businesses of all sizes to offer products free from forced labour. In the event of breaches, the products will be withdrawn from the market. In July 2026, the European Commission launched the Forced Labour Single Portal. It provides guidance on practical implementation, resources for identifying supply chain risks and a provisional list of national law enforcement authorities. By 14 December 2026, EU Member States must notify the Commission of their rules and measures on penalties for non-compliance.

AK criticises measures being watered down – Effective implementation is now key!

AK considers reporting and due diligence obligations essential for understanding the social and environmental impacts of business activities and improving transparency on sustainability initiatives. These are relevant both for the various stakeholders and for identifying risks in the supply chain. It is therefore difficult to justify relaxing or postponing the reporting requirements. Some companies also criticise the political and legal uncertainty created by the Omnibus procedures. Despite the watering down of certain provisions, the priority is now to implement the legislation as effectively as possible at national level. AK will continue to contribute to this process with constructive proposals and recommendations.

Further information

AK EUROPA: Omnibus I
AK EUROPA: Forced labour. How the EU will combat it
AK EUROPA: Deforestation-free supply chains. The regulation is about to be applied
AK EUROPA: Joint letter on the Forced Labour Portal and implementation guidance
AK EUROPA: No to Omnibus
AK EUROPA: The European Alliance for a Just Transition’s Vision for the EU Cycle 2024-2029 and Beyond
AK Wien/Südwind: EU-Entwaldungsvordnung - Änderungen und Auswirkungen (German only)
AK EUROPA: Joint open letter to Ursula von der Leyen. Protect people, nature, and democracy in EU regulations
AK EUROPA: Directive on batteries and waste batteries
Big Oil persuaded EU to delay methane rules. It’s not stopping there. – POLITICO