Is ESG still a priority in EU procurement? Explore how the Omnibus Package reshaped regulations like CSRD and CSDDD, and why responsible sourcing remains essential for staying competitive.
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As regulatory pressure builds across global supply chains, procurement teams in the EU have been at the center of the ESG movement, tasked with ensuring compliance, managing supplier risks, and driving sustainability goals. But in early 2025, the European Commission introduced the “Omnibus Package,” a set of proposals aimed at softening and delaying key ESG-related regulations like the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
While the Omnibus package has fundamentally altered the regulatory landscape for supply chain transparency and ESG priorities, this regulatory simplification doesn't necessarily signal the end of sustainability in procurement. The EU Council's "Stop-the-Clock" Directive may have delayed both CSRD and CSDDD implementation timelines, but ESG remains a business consideration. A 2025 NPC Paribas survey found that 87% of companies report their ESG goals remain unchanged.
The Omnibus package redefined "large" company criteria for CSRD reporting: employee thresholds jumped from 250 to 1,000, effectively removing an estimated 80% of previously affected companies. Most organizations now benefit from a two-year extension for CSRD reporting and an additional year for CSDDD due diligence obligations.
Nevertheless, as EU sustainability regulations continue evolving and organizations are forced to adapt their responsible sourcing strategies to meet both compliance requirements and stakeholder expectations, the question remains: Is ESG still a core priority for procurement in the EU, or is momentum starting to fade?
In this article, we’ll break down where ESG regulation stands today, how the Omnibus Package changes the compliance landscape, and why (despite relaxed rules) procurement teams can’t afford to dial down their sustainability focus.
"What's at stake is more than just regulatory fine-tuning - scaling back reporting requirements means losing vital insights into corporate risks and opportunities." — María Mendiluce, CEO of the We Mean Business Coalition
The European Commission launched the Omnibus Package on February 26, 2025 to boost EU competitiveness as part of a broader simplification agenda. This package adjusts sustainability regulations rather than abandons them.
The Omnibus Package significantly scaled back both directives by focusing them on only the largest companies. For CSRD, it removed sector-specific standards and reduced assurance to a limited level, while also simplifying requirements for climate transition plans. For CSDDD, companies no longer have to end business ties when serious risks are found, they can pause relationships instead. Due diligence updates are now required every five years, not annually.
The Package raised compliance thresholds, limiting CSRD to companies with over 1,000 employees and CSDDD to those with 5,000 employees and €1.5 billion in turnover—removing around 80% of companies from scope. Reporting timelines were also pushed back: CSDDD is now due by July 2028, and CSRD waves 2 and 3 are delayed by two years. These changes aim to reduce administrative costs by €4.4 billion annually.
The core principles remain strong notwithstanding that. The Omnibus Package keeps the "double materiality perspective," which requires qualifying companies to report how sustainability risks affect their business and their effect on people and environment. The Council pointed out that these largest companies "can have the biggest influence on their value chain and are best equipped to absorb the costs".
The EU has adjusted requirements to target companies with the greatest potential effect instead of dismantling sustainability frameworks. Supply chain transparency remains the life-blood of EU sustainability regulations, though with more focused application.
"Without comprehensive sustainability data, businesses, investors and governments will struggle to identify and address climate-related vulnerabilities, weakening their ability to drive resilience, innovation and long-term competitiveness." — María Mendiluce, CEO of the We Mean Business Coalition
Let's get into why sustainability remains a priority whatever the regulatory timelines.
Market pressures haven't slowed down, despite delayed compliance deadlines. Financial stakeholders now factor ESG performance into their investment decisions more than ever. 49% of investors are willing to walk away from companies that fail to act on ESG issues. This change in capital allocation creates real business consequences beyond just regulatory compliance.
Commercial pressure hits procurement teams hard. Companies with poor environmental and social performance are nowhere near as likely to see their contracts renewed or renegotiated: 24% less likely, to be exact.
Green Public Procurement (GPP) remains a key EU strategy for driving sustainability. While still technically voluntary, it’s becoming more common, especially with sector-specific rules and reporting mechanisms on the rise. Public buyers now prioritize low-impact, resource-efficient products, and the market for ecolabelled goods has grown 5% since late 2024, with over 102,000 sustainable options available.
Consumer attitudes about corporate responsibility have grown stronger: 76% say they’d stop buying from companies that harm people or the planet. ESG performance also impacts credit: Moody’s found that 17% of companies saw their ratings affected by ESG issues, with 3% facing major downgrades. These financial penalties hit harder in sectors with high ESG exposure, like automotive, power, and heavy manufacturing.
The takeaway is clear: market expectations for responsible sourcing keep steady, even though regulatory pressures might have eased temporarily. ESG remains critical for procurement professionals whatever the compliance timelines, and thus, procurement teams need practical strategies to guide them through the evolving ESG world.
While the Omnibus Package eased deeper visibility requirements, procurement leaders should still prioritize detailed Tier-1 supplier mapping. Most companies (80%) believe they have good visibility of their Tier-1 suppliers. Yet only 7% have this clarity for Tier-2 suppliers. This visibility gap creates major blind spots. 85% of supply chain risks come from sub-tier suppliers.
Your organization should start with well-laid-out assessments for direct suppliers. The next step is to encourage these suppliers to share information about their upstream networks. Many suppliers still hesitate to share this data.
Third-party verification makes sustainability claims more credible. ISCC has issued over 13,000 valid certificates in more than 130 countries. This provides clear assurance about responsible practices. Factories that follow ISO standards like 9001 for process quality and 14001 for environmental management have better working conditions.
Platforms like Matchory make this easier by allowing procurement teams to filter global suppliers by verified certifications, helping ensure compliance and transparency right from the start of the sourcing process.
Today's procurement platforms include carbon footprint calculators, supplier ethics ratings, and ESG performance dashboards. These tools help you find suppliers with strong sustainability credentials or diversity certifications. AI-powered solutions can now gather ESG data from over 130 million companies across 250+ geographies. These systems can spot risks even when suppliers don't publish formal reports.
The Omnibus Package's simpler rules give procurement teams room to breathe and use changes to their advantage. Research shows 70% of businesses who responded to public consultations acknowledged EU action was needed for corporate sustainability due diligence. This break gives you a great chance to boost your competitive edge.
With CSDDD no longer requiring automatic supplier termination, companies can focus on shared risk management. Clear Codes of Conduct and improvement plans help suppliers understand what’s needed to stay compliant.
Suppliers need you as much as you need them. You can build trust-based relationships through open talks about ESG requirements. These relationships add value to shared sustainable procurement efforts.
With extended timelines, now’s the ideal moment to strengthen your ESG data infrastructure. KPMG recommends using this window to refine supplier surveys, improve data collection templates, and test reporting tools without the pressure of looming deadlines. Digital platforms that allow suppliers to update their own ESG metrics can streamline KPI tracking and automate compliance checks. Identifying overlapping data requirements across regulations also helps future-proof your systems and reduce duplication.
Industry input will be crucial as the EU revises standards. If current data requirements are impractical, use industry groups or public consultations to suggest improvements. The EU aims for better alignment with global reporting standards to reduce duplicate reporting. The upcoming 2026 revision of the EU Public Procurement Directive offers another opportunity to influence sustainable procurement rules that balance impact and practicality.
Despite the regulatory easing introduced by the Omnibus Package, ESG remains firmly embedded in the priorities of EU procurement. The delayed timelines and raised thresholds offer companies a valuable opportunity to refine their sustainability strategies, enhance supplier relationships, and improve data collection systems. Market and investor pressures continue to drive demand for transparency, responsible sourcing, and credible certifications—making ESG performance a critical business factor, not just a compliance checkbox.
Procurement teams that leverage this period to build stronger supplier partnerships, pilot innovative digital tools, and actively engage in shaping future regulations will be best positioned for long-term success. The evolving EU sustainability landscape demands proactive adaptation, and while some rules may have softened, the core commitment to environmental, social, and governance responsibility remains as vital as ever.
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