Although many small and medium-sized enterprises (SMEs) will fall outside the formal scope of the sustainability reporting and due diligence obligations following the Omnibus I reform, the practical legal implications do not end there. Requirements arising within the value chains of large companies, financing arrangements and evolving market practices may still create obligations for smaller companies to provide sustainability-related information and manage related risks.

For SMEs, the central issue is therefore not only whether they fall within the scope of EU sustainability legislation, but how sustainability-related obligations may arise indirectly through contracts, value chain requirements and other regulatory frameworks. In many cases, the relevant legal exposure for SMEs derives not from direct statutory obligations but from commitments made in commercial relationships.

Against this background, SMEs should assess how to identify and manage these legal risks without creating unnecessary administrative structures. The following checklist highlights key legal considerations when preparing for the effects of the Omnibus I reform.

1. Identify indirect legal obligations within the value chain

Even where statutory reporting obligations do not apply directly to an SME, larger customers operating within the same value chain may impose sustainability-related requirements on their suppliers.

In practice, many obligations for SMEs arise through contractual arrangements with larger companies, which themselves remain subject to sustainability reporting or due diligence requirements. SMEs should therefore review the contractual and operational expectations of their key customers.

Particular attention should be paid to:

• ESG or sustainability questionnaires distributed to suppliers
• reporting and disclosure obligations contained in supplier agreements as well as other possible contractual obligations
• audit rights and supplier monitoring procedures
• certification requirements or references to sustainability standards

A key legal question for SMEs is therefore the following: what information or commitments are customers likely to require over the next 12–24 months? Understanding these expectations in advance allows companies to prepare for potential contractual disclosure obligations and compliance requirements.

2. Establish a structured approach to sustainability-related documentation

For SMEs, implementing complex reporting systems may not be proportionate. Nevertheless, companies should ensure that relevant sustainability-related information is documented in a systematic manner.

From a legal perspective, the purpose of such documentation is not necessarily to produce formal sustainability reports, but rather to ensure that the company can respond to contractual disclosure requests, compliance inquiries or potential due diligence assessments.

In practice, companies may wish to maintain at least basic documentation regarding:

• key environmental impacts, such as energy consumption, emissions or waste
• workforce-related information
• key risks associated with suppliers
• internal ethical guidelines or compliance policies

Maintaining such documentation helps ensure that the company is able to provide relevant information when requested by customers, business partners or financiers.

3. Standardise ESG information provided to customers

Administrative burden for SMEs often arises when different customers request similar sustainability information in slightly different formats.

To mitigate this, companies may benefit from standardising their sustainability-related disclosures. Preparing a single ESG information package or template that can be used in multiple situations may significantly reduce the effort required to respond to information requests.

In addition, SMEs may wish to:

• prepare standard responses to frequently requested sustainability information
• designate a responsible person to coordinate responses to ESG-related requests

Such standardisation can help ensure consistency in the information provided while reducing administrative workload and the risk of inconsistent disclosures.

4. Review contract templates and contractual commitments

For many SMEs, the most significant legal exposure arises not from legislation itself but from contractual commitments made in supplier agreements or other commercial arrangements.

Sustainability-related provisions are increasingly incorporated into contracts, including commitments relating to reporting, compliance with environmental or human rights standards and cooperation with customer due diligence processes.

Companies should therefore review their contract templates and pay particular attention to provisions relating to:

• sustainability-related commitments and representations
• reporting and disclosure obligations
• contractual penalties and liability clauses
• customer audit rights

From a legal risk perspective, companies should avoid committing to sustainability obligations that they cannot realistically monitor, verify or fulfill in practice.

5. Assess the legal implications of voluntary sustainability disclosures

Some SMEs may consider voluntary sustainability reporting or broader transparency regarding sustainability practices. While such disclosures may have commercial benefits, they should also be assessed from a legal perspective.

Public sustainability statements may create expectations or representations that could later become relevant in contractual relationships, financing arrangements or regulatory assessments. Companies should therefore ensure that any voluntary disclosures are consistent with the company’s actual practices and supported by adequate internal documentation.

This perspective is becoming increasingly important as regulation on green claims evolves. The aim of the regulation is to ensure that companies’ environmental claims are verifiable, well-founded, and not misleading to consumers. For this reason, even voluntary sustainability statements and claims should be carefully formulated and supported by appropriate documentation.

6. Monitor changes in customers’ compliance frameworks

The Omnibus I reform primarily affects the compliance systems of large companies. As these companies adapt their internal governance and reporting processes, changes are likely to affect their suppliers as well.

SMEs should therefore monitor developments such as:

• new supplier compliance requirements
• updated ESG reporting templates
• risk-based supplier classification systems

Early awareness of such changes allows SMEs to anticipate contractual requirements and reduce the risk of disruption in existing supply chain relationships.

7. Ensure that management understands the regulatory developments

In SMEs, responsibility for sustainability-related matters and related contractual risks often lies directly with senior management. It is therefore important that management has a clear understanding of the legal implications of the evolving sustainability regulatory framework.

This may involve internal briefings on regulatory developments, a management-level decision regarding the company’s approach to sustainability disclosures and a clear allocation of responsibility for maintaining relevant documentation.

8. Monitor national implementation

The Omnibus I reform is based on EU-level legislation, but its practical effects will become clearer through national implementation and application of the law.

Companies should therefore monitor how the relevant directive amendments are transposed into national legislation and how the rules are interpreted and applied in practice. National implementation will ultimately determine how the regulatory framework affects SMEs in specific jurisdictions.

9. Conduct a targeted legal review where necessary

A focused legal assessment may help SMEs identify the most relevant sustainability-related legal risks without requiring extensive compliance programmes.

Such a review may cover, for example:

• sustainability-related contractual obligations
• risks arising within supply chain relationships
• potential reporting or disclosure requirements
• possible liability exposure or damages risks

For many SMEs, a limited and practical legal review may be sufficient to identify the most significant risk areas.

10. Consider the broader sustainability regulatory framework

When assessing the Omnibus I reform, it is important to recognise that sustainability reporting and due diligence rules form only part of a broader EU sustainability regulatory framework.

Although the obligations under the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) have been narrowed, several other regulatory instruments affecting companies and their value chains have entered into force or are currently being developed within the EU.

Examples include:

• the EU Regulation on deforestation-free products (EUDR)
• the Sustainable Finance Disclosure Regulation (SFDR)
• the Directive Empowering Consumers for the Green Transition concerning green washing
• the Forced Labour Regulation, which aims to prevent products made with forced labour from entering the EU market

For SMEs, this means that even where individual reporting or due diligence obligations are reduced, the overall regulatory trajectory continues to emphasise transparency and corporate responsibility. Companies should therefore consider sustainability-related obligations as part of a broader regulatory ecosystem rather than focusing solely on individual directives.

Summary for SMEs

The Omnibus I reform will generally not introduce new direct legal obligations for SMEs. However, it will influence market practices and the contractual dynamics of value chains.

From a legal perspective, the most important steps are:

• understanding sustainability-related requirements imposed by customers
• maintaining basic sustainability-related documentation
• managing contractual commitments and related legal risks
• taking into account other relevant sustainability regulation

Early identification of contractual obligations, regulatory developments, and value chain expectations helps companies reduce compliance risks and avoid unintended liability under the evolving EU sustainability framework. At the same time, it can also serve as a significant competitive advantage, as companies that can manage sustainability requirements effectively may strengthen their position in the market and within value chains.

For SMEs operating especially in EU value chains, it is increasingly important to understand how the Omnibus I reform, ESG requirements, and the broader EU sustainability regulatory framework affect contractual relationships. If you would like to assess how these developments may impact your company, our experts can assist with a targeted legal review of your contracts, reporting obligations, and supply chain requirements – while also identifying potential competitive advantages through proactive sustainability practices.

 

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