CSDDD After Omnibus I

CSDDD after Omnibus I: the short answer

The Corporate Sustainability Due Diligence Directive (EU) 2024/1760 (CSDDD) has been substantially narrowed by Directive (EU) 2026/470 of 24 February 2026, the so-called Omnibus I directive, published in the Official Journal on 26 February 2026. Under the CSDDD after Omnibus changes, only EU companies with more than 5,000 employees and a net worldwide turnover above EUR 1.5 billion, and non-EU companies with EU turnover above EUR 1.5 billion, are in scope. Member States must transpose the amended Directive by 26 July 2028 and apply it from 26 July 2029. The obligation to adopt a climate transition plan has been deleted, the EU-wide civil liability regime has been removed, and maximum fines are capped at 3 per cent of worldwide turnover.

For German companies, the CSDDD after Omnibus I will replace the Supply Chain Due Diligence Act (LkSG), which the government intends to substitute with a new statute on international corporate responsibility. This article summarises the changes, their consequences for German groups of different sizes and the practical steps to take now.

Revised scope thresholds

Article 2 of the CSDDD, as amended by Directive (EU) 2026/470, now defines scope as follows.

Compared with the original Directive, which started at 1,000 employees and EUR 450 million turnover, the number of companies in scope falls sharply. The CSDDD after Omnibus I thereby covers fewer German companies than the LkSG, which applies from 1,000 employees in Germany. Smaller German companies will nevertheless remain affected as suppliers of in-scope customers, which will pass on information requests and contractual obligations along the chain of activities.

New timeline

The stop-the-clock Directive (EU) 2025/794 had already postponed transposition to 26 July 2027. Omnibus I replaces the phased application with a single date: Member States must adopt and publish their transposition laws by 26 July 2028 and apply them from 26 July 2029. The reporting obligation in Article 16 applies for financial years starting on or after 1 January 2030. The Commission must adopt guidance on model contractual clauses by 26 July 2027 and further guidelines by 26 July 2027 and 26 July 2028. Its first review report is due by 26 July 2031.

What changes in the due diligence process

The core architecture of the CSDDD remains: companies must integrate due diligence into policies and risk management, identify and assess adverse impacts, prevent and mitigate potential impacts, bring actual impacts to an end, remediate, engage with stakeholders, operate a notification mechanism and complaints procedure, monitor effectiveness and communicate. Omnibus I makes the process more risk-based and less burdensome in several respects:

• Risk factors. Under the amended Article 8, the identification of adverse impacts takes into account risk factors at the level of the business partner (for example whether it is itself covered by comparable due diligence laws), geography, sector, business operations and products.
• Prioritisation. Where a company prioritises the most severe and likely impacts, the mere fact of not having addressed a less significant impact does not expose it to penalties (new Article 9(4)).
• Last-resort measures. Where impacts cannot be prevented, the company must refrain from entering into new or extending existing relationships and, as a last resort, suspend the relationship. Before suspending, it must assess whether suspension would cause manifestly more severe harm, and it may continue engaging while there is a reasonable expectation that an enhanced prevention action plan will succeed.
• Group compliance. Parent companies can fulfil obligations on behalf of subsidiaries if this ensures effective compliance (amended Article 6).
• Contractual assurances. The Commission will provide guidance on voluntary model contractual clauses by 26 July 2027.

Deletion of the climate transition plan obligation

The original Article 22 CSDDD required in-scope companies to adopt and put into effect a transition plan for climate change mitigation aligned with the 1.5 °C goal. Omnibus I deletes Article 22 entirely. Companies within the scope of the CSRD may still need to disclose transition plans under the European Sustainability Reporting Standards if they have them, and investors and lenders increasingly expect them. But the CSDDD after Omnibus I no longer imposes a stand-alone duty to adopt one.

Civil liability and penalties

The original Article 29(1) CSDDD created an EU-wide civil liability regime under which companies could be liable for damage caused by intentional or negligent failure to prevent or end adverse impacts. Omnibus I deletes that paragraph. Civil liability now depends on national law, with the amended Article 29 ensuring that where a company is held liable under national law, the injured person has the right to full compensation and that liability is without prejudice to the liability of subsidiaries and business partners. Member States are no longer required to ensure that the liability rules are overriding mandatory provisions in cross-border cases.

On penalties, Member States must ensure that the maximum limit of pecuniary penalties is set at 3 per cent of net worldwide turnover, or consolidated turnover at the level of the ultimate parent company, in the financial year preceding the decision (amended Article 27(4)). The Commission, with Member States, will issue guidance on setting penalty levels. Each Member State must designate supervisory authorities, and must inform the Commission of them by 26 July 2028.

Stakeholders, complaints and monitoring

Stakeholder engagement remains a central element of the CSDDD after Omnibus I, but the amended text focuses it on relevant stakeholders and the stages of the process where their input matters most, such as identifying impacts, developing action plans and deciding on suspension. Companies must still operate a notification mechanism and complaints procedure accessible to persons affected by adverse impacts, trade unions, workers' representatives and civil society organisations active in the relevant areas. The Directive also requires periodic assessments of the effectiveness of due diligence measures.

For German companies, the LkSG complaints procedure is a good starting point. It must be reviewed to ensure that it is accessible to the broader group of persons and organisations the CSDDD contemplates, that it covers the chain of activities as defined in the Directive, and that complaints lead to documented follow-up. Effectiveness monitoring should use indicators that can be explained to a supervisory authority, such as the time taken to respond to complaints, the share of high-risk suppliers covered by corrective plans and the results of follow-up audits.

Interplay with the CSRD and the financial sector

Omnibus I amended the CSDDD and the Corporate Sustainability Reporting Directive together. Companies within the scope of the CSRD, now limited to those with more than 1,000 employees and EUR 450 million turnover, report on their due diligence processes through the European Sustainability Reporting Standards. The CSDDD's own reporting obligation in Article 16 applies only to companies not already reporting under the CSRD. Alignment between the two regimes reduces duplication, but the underlying data must be consistent.

Financial undertakings remain covered by the CSDDD only for their own operations and upstream activities; downstream activities such as lending and investment are outside the chain of activities. The review clause asks the Commission to reassess this. Banks and investors nevertheless increasingly request due diligence information from borrowers and portfolio companies on a contractual basis.

Maximum harmonisation and German transposition

The new Article 4 introduces maximum harmonisation for the core due diligence provisions. Member States may not introduce human rights and environmental due diligence obligations diverging from Articles 6, 8 and 9, Article 10(1) to (5), Article 11(1) to (6) and Articles 14 to 16. They remain free to adopt more stringent rules in other areas, for example on supervision, sanctions or specific products and sectors.

For Germany, this means that the future statute replacing the LkSG cannot retain LkSG-specific due diligence rules that diverge from the harmonised core. The government's LkSG amendment bill states the intention to transpose the CSDDD in a way that keeps bureaucracy low and enforcement manageable. Key policy choices still open in Germany include the competent authority (BAFA under the LkSG), the design of fines within the 3 per cent cap and the civil liability rules under German tort law.

What the CSDDD after Omnibus I means for German groups

German companies fall into three groups. Large groups above the new thresholds will need to transition from LkSG systems to CSDDD systems by 2029, with a stronger focus on adverse impacts across the chain of activities and on stakeholder engagement. Companies between 1,000 employees and the new thresholds will leave the scope of due diligence legislation once the LkSG is replaced, unless the German legislator decides otherwise within the limits of harmonisation. Suppliers of all sizes will continue to receive requests from customers and should expect contractual cascading of due diligence obligations, now framed by the Commission's model clauses.

Illustration: a hypothetical German machinery group with 6,500 employees and EUR 2 billion worldwide turnover is in scope of both the LkSG and the CSDDD after Omnibus I. It keeps its LkSG risk analysis and complaints procedure, revises its prioritisation methodology to match the CSDDD's risk factors, prepares enhanced prevention action plans for high-risk suppliers and drops work on a stand-alone CSDDD transition plan, while keeping its CSRD transition plan disclosures.

How TRW & Co helps with the CSDDD after Omnibus I

We advise German companies on the transition from the LkSG to the CSDDD after Omnibus I. We assess whether groups fall within the new thresholds, map existing LkSG processes against CSDDD requirements, redesign risk prioritisation, remediation and complaints procedures, and draft supplier contracts and codes consistent with the forthcoming model clauses. We also follow the German transposition process and advise on liability and enforcement risks. Our work connects with our supply chain due diligence and sustainability reporting practices. See also the LkSG reform and CSRD after Omnibus I. To plan your transition, contact us.