Navigating the Proposed Omnibus Changes to CSDDD

In keeping with recommendations published in the Draghi report, the European Union has proposed an Omnibus Simplification Package containing amendments to its sustainability directives. The changes will present both challenges and opportunities for Chinese companies active in Europe or in EU value chains.

Since the early 2000s, the European Union (EU) has pursued a robust sustainability agenda to foster a resource-efficient economy, achieve climate neutrality and protect biodiversity. Central to these ambitions is the Corporate Sustainability Due Diligence Directive (CSDDD), one of the latest additions to the EU regulatory framework. The CSDDD mandates that companies identify and assess adverse human rights and environmental impacts within their operations, subsidiaries and value chains.  

Proposed Omnibus amendments: reducing complexity, retaining impact

The EU’s recently proposed Omnibus Simplification Package aims, among other objectives, to postpone the CSDDD’s entry into force, simplify its framework and reduce the obligations on companies. The amendments have been drafted to enhance competitiveness while still achieving overall sustainability goals. Consequently, Chinese companies doing business in the EU have a timely opportunity to strategically align with the evolving regulations.

As of May 2025, the proposed changes to the CSDDD include:

• Reducing the number of third-country companies covered by raising the threshold from €150 million annual turnover in the EU to €450 million
• Limiting due diligence obligations so they apply only to direct business partners
• Avoiding mandatory termination of non-compliant suppliers, favoring instead the adoption of Corrective Action Plans (CAPs)
• Eliminating EU-wide civil liability provisions, opting instead for administrative enforcement mechanisms through national supervisory authorities
• Reducing monitoring frequency from once a year to once every five years
• Delaying phased implementation by one year to 2027, with full compliance expected by 2029

Under this proposed revision of the CSDDD, both EU and non-EU companies operating in the EU that meet the employee and turnover thresholds are still required to implement a comprehensive due diligence framework. This includes identifying and assessing human rights and environmental risks, conducting meaningful stakeholder engagement, establishing accessible complaint mechanisms, designing preventive and remedial measures, and ensuring their monitoring.

EU shift, global repercussions: impact for Chinese companies

While the CSDDD only applies to certain companies operating within the EU or generating significant revenue in the EU domestic market, its practical effects will reach far beyond EU borders. One of the most affected groups will be Chinese subsidiaries operating in any of the 27 EU member states, along with Chinese suppliers and manufacturers that are deeply embedded in the value chains of EU companies.

Beyond the implementation challenges, however, the proposed changes to the CSDDD offer enhanced opportunities for Chinese companies in the form of a more favorable environment for adaptation and growth.

Chinese companies operating in the EU

Chinese companies with significant operations in the EU are directly subject to the CSDDD if they meet the thresholds. For many of these companies, especially those already active in regulated markets like France and Germany, compliance with the CSDDD will feel like a continuation of existing efforts rather than a new challenge – an incremental rather than disruptive process. This is due to the companies’ prior experience with similar requirements under France’s Duty of Vigilance Law and Germany’s Supply Chain Due Diligence Act (LkSG). For other companies, the CSDDD introduces opportunities for strategic planning and investment.

Chinese companies embedded in EU value chains

Chinese companies acting as suppliers and manufacturers for EU industries will be directly affected by the revised provisions of the CSDDD. China’s strong business ties with the EU mean that many Chinese companies will need to adjust to the requirements of the post-Omnibus Directive. This shift underscores China’s crucial role in shaping and responding to the evolving global compliance landscape.

Conclusion

The proposed changes* to the CSDDD would redefine the regulatory environment, offering Chinese companies opportunities for greater access to international markets while allowing them to position themselves as players engaging in responsible business practices.

While the simplified requirements and extended timelines will reduce the pressure on companies, it is important to note that the Omnibus package is a draft proposal and subject to change during the ongoing legislative process. The amendments are currently under review by the European Parliament and the Council of the EU, and the timing of their adoption remains uncertain. Consequently, companies must carefully navigate both Chinese and international regulations and remain vigilant of potential changes. Given the dynamic regulatory environment, they must integrate proactive strategies into their ongoing operations if they want to maintain readiness and succeed on an international scale.

* This article was written on May 25, 2025, and reflects the information and perspectives available at that time regarding the Corporate Sustainability Due Diligence Directive (CSDDD). Since then, there have been significant developments and changes related to the CSDDD. As legislative processes are dynamic, readers are advised to consult the latest sources and updates to obtain the most current information. The views and interpretations herein are based solely on the context provided up to the initial writing date and may not incorporate subsequent amendments or discussions. This article should not be used as a sole resource for decision-making related to compliance or strategic planning concerning the CSDDD.