At the end of February, the European Commission introduced a sweeping set of revisions to upcoming sustainability reporting and due diligence regulations.
This marks one of the most significant shifts in EU corporate sustainability policy in recent years. The initiative, known as the Omnibus Simplification Package, aims to streamline compliance while redefining the scope and expectations of corporate sustainability obligations.
Here are a few key things to know as everyone in the cocoa sector waits to see what happens next:
1, Two major pieces of corporate sustainability policy could be affected – potentially in a big way.
Two key directives, the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), are poised for significant amendments. While the CSRD was originally set to take effect first, its reporting requirements, initially due this year, are now expected to be postponed by two years.
The proposed revisions, initially intended to ease the reporting burden, could substantially reshape due diligence requirements for many companies – including those in the cocoa and chocolate sector – that are based in the EU, have subsidiaries there, or conduct substantial business within the region.
2. There are two proposed sets of changes: First to timing, then to substance.
The Omnibus contains two core proposals, both requiring approval from the European Parliament and the Council.
- Postponements: The CSRD implementation would be delayed by two years, meaning large companies would now be required to report in 2028 for the 2027 financial year. Meanwhile, the deadline for CSDDD’s transposition into national law would be pushed by one year (from July 2027 to July 2028).
- Substantive Revisions: The second set of changes focuses on modifying the core requirements of both directives. While details are still unfolding, the first priority appears to be fast-tracking the postponement proposal to provide businesses with greater certainty as they prepare for compliance.
3. Requirements are being scaled back, but uncertainty remains.
While many details still need clarification, the general trend under the proposed changes is a narrowing of scope and a reduction in reporting requirements.
CSRD: Fewer Companies Affected, Fewer Data Points Required: Under the new proposal, significantly fewer companies will be required to comply. Businesses will generally need to have more than 1,000 employees on average during a reporting year and either turnover above €50 million or a balance sheet above €25 million to fall in scope. Companies will also be restricted from requesting reporting information from suppliers with fewer than 1,000 employees. While this change is intended to ease the reporting burden on small businesses, it has the effect of weakening due diligence efforts across supply chains. Sector-specific reporting standards under CSRD will no longer be introduced, and sector-agnostic standards will be revised to reduce the number of data points required once the Omnibus is passed.
CSDDD: Major Scope Reductions and Relaxed Due Diligence Obligations: Only companies with 3,000-plus employees and turnover above €900 million will be required to comply, drastically reducing the number of affected businesses. Perhaps the most fundamental shift is that due diligence requirements would be limited to a company’s own operations and Tier 1 suppliers. However, if a company has credible information suggesting that harmful environmental or human rights impacts may be occurring (or are likely to occur) within the operations of an indirect supplier or business partner, the company will be required to investigate further through an in-depth assessment. If an indirect supplier relationship exists solely to bypass accountability, companies will be required to conduct an in-depth assessment and take appropriate action to address any identified risks. Regular due diligence reviews will be reduced from annually to once every five years, and companies will need their sustainability reports to be audited or verified by an independent third party to ensure accuracy and reliability. EU-wide civil liability provisions will be removed, and Member States will be barred from introducing additional human rights or environmental due diligence measures beyond the EU standard.
With significant changes still under discussion, what questions should cocoa and chocolate companies be asking themselves in the months ahead? Here are three to consider.
1. “Should we still be ready to report if nothing changes?”
While the Omnibus proposes delaying CSRD and CSDDD, the current implementation schedule remains in place unless these changes are officially approved, so companies should continue to plan accordingly. Companies should continue preparing under the current timeline to avoid being caught off guard if the proposals stall.
2. “Will our company be in scope? What about our suppliers?”
Many businesses are already evaluating whether they fall under the new thresholds. While this may be straightforward for direct compliance, determining supplier obligations is a different challenge. Smaller suppliers (under 1,000 employees for CSRD and 500 employees for CSDDD) will not be required to provide reporting data, which could create gaps in visibility. As these regulatory changes take shape, companies should evaluate their supply chains to identify potential blind spots and develop strategies to maintain due diligence and transparency, alongside preparing for audits and third-party verification processes for ESG disclosures.
3. “How are we preparing to measure and report?”
Even with reduced reporting requirements, measuring key environmental and social indicators will remain complex. The World Cocoa Foundation (WCF) has been working to develop sector-wide impact measurement tools and methodologies on farmer incomes, greenhouse gas emissions accounting, deforestation risk and more – all of which can help companies to prepare for compliance.
As the requirements for CSRD, CSDDD and other regulations like the EU Deforestation Regulation (EUDR) all come into focus, WCF will continue to refine these tools and methodologies to help companies report in standard, efficient, credible and compliant ways. As the Omnibus process takes shape, WCF will provide greater clarity and support to help its members prepare for compliance in due course.
Many of these discussions will take centre stage next week in Brazil, where WCF will host its Annual Partnership Meeting. If you haven’t already registered, this will be an invaluable opportunity to gain insights, seek clarity and prepare for the evolving regulatory landscape.
