The litigation and liability risk to companies in Europe could rise if changes are pushed through that mean corporates no longer need to “put into effect” climate transition plans, according to lawyers from across the continent and the UK.

An open letter, signed by 31 academics, argues that changes proposed for Article 22 of the Corporate Sustainability Due Diligence Directive (CSDDD) would increase legal risks.

Changes proposed in the EU’s omnibus process, aimed at making companies more competitive, would mean companies must publish climate transition plans but face no legal obligation to act upon them. This is a significant change from the law as it was previously written.

The letter says “the amendment in the omnibus proposal would have the consequence that companies would not be legally required to put their transition plan ‘into effect’ under Article 22. Mere paperwork, instead of good faith action, would suffice in meeting the obligation.”

Those signing the letter include Ivano Alogna, senior research fellow in climate law at the British Institute of Comparative Law, and Harro van Asselt, a climate law professor at the University of Cambridge. Other signatories come from universities in the Netherlands, France and Italy.

‘Empty promises’

Liability risks would rise, the letter argues, because the reformed law would encourage “empty promises and greenwashing. Outcomes which would increase the liability exposure of companies and undermine the transformative action needed to meet the EU’s climate goals.”

Litigation risk would rise because, the lawyers claim, without a binding regulatory framework, “the regulatory gap will be filled by courts in each EU member state, creating uncertainty, inefficiency and a fragmented legal framework for companies operating within the internal market.”

The omnibus process was launched in February to simplify both the CSDDD and the Corporate Sustainability Reporting Directive (CSRD) following complaints from member states and a report on EU competitiveness.

The report, written by former European Central Bank president Mario Draghi and published in September last year, criticised the CSRD and CSDDD.

“The EU’s sustainability reporting and due diligence framework is a major source of regulatory burden magnified by a lack of guidance to facilitate the application of complex rules and to clarify the interaction between various pieces of legislation,” the report said.

Though there is much support for the omnibus process in business circles, its proposals have faced increasing disapproval.

In the past week the European Central Bank itself has raised concerns arguing that amendments to CSRD mean there would be much less data on climate coming from financial institutions and at a time when it is in demand by stakeholders.

The European Commission hopes to have new draft of the omnibus by early 2026.