In recent years, the European Union has taken a decisive step towards regulating the corporate due diligenceThis concept, initially promoted by international organizations as an ethical expectation, has become a structural pillar of corporate sustainability policies. Today, companies must not only commit to respecting human rights and the environment throughout their value chains, but also demonstrate this through formal procedures, preventive measures, and accountability mechanisms.
Over the last few years, the European Commission has promoted a ambitious regulatory package which includes binding obligations for large companies, particularly through the Corporate Sustainability Due Diligence Directive (CSDDD), adopted in 2024. This directive seeks to ensure that European companies—and those operating significantly in the single market—identify, prevent, and mitigate negative impacts on human rights and the environment. In parallel, complementary regulations such as the Corporate Sustainability Reporting Directive (CSRD) They strengthen the traceability and accountability of due diligence obligations, contributing to their effective and transparent implementation.
Adopted in 2024, the CSDDD imposes on large EU companies - and those outside the EU with significant activity in the European market - the obligation to Integrate due diligence into your corporate strategyThis mandate applies to companies with more than 1,000 employees and a turnover exceeding €450 million. In practice, these companies must Identify and address actual and potential impacts on human rights and the environment, implement both preventive and corrective measures, establish accessible grievance mechanisms, and publish detailed reports on the actions taken. They must also develop a climate transition plan in line with the objectives of the Paris Agreement. The directive also includes a limited civil liability, applicable when a direct causal connection between the failure to exercise due diligence and damage can be demonstrated, such as forced labor or supplier-induced deforestation.
However, in recent months, Europe has shown growing concern about Strengthen business competitiveness and reduce the regulatory burden on sustainability, even before some of the recently adopted directives have been fully transposed by the Member States. Draghi Report 2024 already warned about this challenge, noting that while the European Union continues to lead the way in sustainability and ESG regulations, excessive bureaucracy could be limiting economic growth and its companies' ability to compete globally. In particular, the report emphasized that “Innovative companies seeking to scale in Europe are hampered at every stage by inconsistent and restrictive regulations.”.
In this context, the adoption of the “Bus Package” by the European Commission on February 26, 2025 has shaken up the regulatory landscape in corporate sustainability. This legislative proposal has sparked intense debate between those who consider greater regulatory flexibility necessary to boost competitiveness and those who warn about the risk of weakening environmental and social commitments that the EU has been building for more than a decade, thus rekindling an underlying tension: to what extent can Europe lead in sustainability without jeopardizing its global competitiveness? This question takes on particular relevance at a time when many companies are still preparing to comply with new regulatory frameworks. Analyzing the progress, setbacks, and challenges posed by this new regulatory balance is essential to understanding where European business policy is headed.
Although the Omnibus Package does not eliminate essential commitments in terms of sustainability, it introduces substantial changes in the CSDDD that could distort the original spirit of the CSDDD and generate adverse effects by promoting a regulatory fragmentation, trigger legal uncertainty and endangering fair competition conditions, thus distancing the European framework from the international standards enshrined in the United Nations Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises and the OECD Due Diligence Guidance for Responsible Business Conduct.
Among the most relevant changes The CSDDD includes a postponement of the entry into force for larger companies—currently scheduled for July 26, 2028—an extension of the due diligence update cycle to five years, and a restriction on Member States' ability to establish stricter standards. Similarly, the possibility of establishing direct civil liability at the European level is eliminated, although the right of victims to receive compensation for damages caused by corporate non-compliance is maintained. Furthermore, the financial sector is excluded from the scope of application; reporting requirements for small and medium-sized enterprises are reduced; the obligation to terminate business relationships with partners that generate negative human rights impacts is relaxed; and the requirement to maintain an active climate transition plan is eliminated. Finally, the administrative burden on small and medium-sized enterprises, as well as mid-cap companies, is reduced by limiting the amount of information that large companies can request from them in the process of mapping their value chain.
It should be stressed that, despite the dilutions introduced by the Omnibus Package, the Both normative and social expectations regarding responsible business behavior remain intact —and in some cases, have even intensified. Regulators, investors, consumers, the media, and civil society continue to demand a high level of responsibility from companies, especially those that are part of complex supply chains. Companies must take into account not only the legal risks and economic risks—such as fines, litigation, or exclusion from public contracts, and the possible loss of access to financing if they do not comply with the increasingly required ESG criteria—but also reputational risks.
In this context, the proactive management ESG risks becomes indispensable. Business leadership involves going beyond the legal minimum, anticipating regulatory changes, and committing to a development model that generates shared value. Companies that aspire to operate with legitimacy, resilience and competitiveness In the long term, they must consider respect for human rights and the environment as an inescapable duty, and a legalistic or reactive vision is not enough: it is necessary to integrate due diligence as a an integral part of the business modelThis involves establishing clear policies on human rights and the environment, including cascading contractual due diligence clauses throughout the value chain, investing in supplier training and awareness, creating effective participation spaces for workers and affected communities, and generating sustainability reports aligned with the ESRS standards, capable of responding to the transparency demands of all stakeholders. Particularly in the early stages of the supply chain—where risks are highest and most difficult to detect—companies must combine periodic audits with capacity-building programs, as well as ensure secure mechanisms for individuals to report abuses. When impacts persist and there are no improvements, they must be prepared to implement "responsible disengagement”, in line with the recommendations of the OECD.
Compliance with recognized international frameworks is not only an ethical requirement, but also a strategic investment that can make a difference in an increasingly demanding global market. The challenge is not only to comply with regulations, but to lead the change towards fairer, more transparent, and sustainable business models. Commitment to sustainability is presented as a differentiating element in global competitivenessIn this scenario, the challenge for the European Union will be to maintain consistency between its regulatory ambitions for sustainability and the international commitments it has promoted, thus avoiding the risk of regulatory fragmentation and the loss of global leadership in corporate responsibility.
In this context of regulatory transformation, Boleo Global supports companies seeking to align their operations with international standards. We have experience developing due diligence frameworks for high-risk sectors, integrating employee-driven social responsibility models into responsible sourcing programs. Through these efforts, we contribute to strengthening due diligence as a strategic tool for corporate sustainability, a effective risk management ESG in the value chain.