EU’s Omnibus Package Sparks Debate on Supply Chain Rules

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The EU package purports to enhance Europe's competitiveness and streamline regulations
The EU’s new omnibus regulation aims to simplify sustainability rules, but companies and politicians argue it could disrupt supply chains

Regulation often walks a fine line — too much can overwhelm businesses, but too little risks stalling sustainability efforts.

The European Union’s (EU) upcoming omnibus regulation package seeks to reduce the regulatory burden on companies.

However, many businesses and policymakers argue that this approach could compromise sustainability goals, especially in the area of supply chain management.

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An open letter from the Collège des Directeurs du Développement Durable (C3D), representing more than 400 French companies, urges the European Commission to “support companies with resources and guidance to ensure compliance while maintaining competitiveness.”

The letter reflects widespread concerns about how regulatory changes might affect businesses’ ability to meet sustainability targets without losing their competitive edge.

Major corporations including Unilever, Nestlé, Mars, Primark, DP World and Signify have voiced their concerns.

In a joint letter, they state: “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.”

The Corporate Sustainability Due Diligence Directive (CSDDD) requires companies to identify and address environmental and human rights risks in their supply chains. Without clear guidelines, businesses fear inconsistent implementation across the EU.

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

Nicholas Mazzei, Vice President for Sustainability at DP World

The push and pull of policy change

The omnibus package is part of a broader EU effort to boost competitiveness, driven by the findings of the 2024 Draghi Report.

The report highlights that “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, set to be published on 26 February 2025, aims to streamline sustainability reporting across directives like the Corporate Sustainability Reporting Directive (CSRD) and CSDDD.

However, critics argue that the proposed changes go beyond simplification.

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

Andreas Rasche, Professor and Associate Dean at Copenhagen Business School

"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 opposition is also growing within the European Parliament. The Renew Europe group, for example, 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

Supply chains are at the heart of this regulatory debate. For companies, the clarity and consistency of regulations like the CSRD and CSDDD are crucial for maintaining sustainable operations across borders.

Revisions to these laws risk creating uncertainty, making it harder for businesses to plan long-term strategies.

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

Lara Wolters, Member of the European Parliament (S&D, NL)

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

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

Gwenaelle Avice Huet, Executive Vice President of Europe Operations and Member of the Executive Committee at Schneider Electric

"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 key tension: how to foster a competitive business environment without sacrificing sustainability.

President of the European Commission, Ursula von der Leyen - Credit: World Economic Forum

As Ursula von der Leyen, President of the European Commission, 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 businesses navigating global supply chains, the outcome of this debate will shape not just regulatory compliance, but the future of sustainable growth in Europe.


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