Most of the ingredients included in embalming fluids harm the microbes in the soil, but they to break down over time.
Formaldehyde: CH2O → CO + H2
Formaldehyde is broken down into carbon monoxide and hydrogen gas, and it can then be oxidized to form formic acid. Formic acid can then be oxidized to form carbon dioxide.
Methanol: CH3 OH→CO+2H2
Methanol breaks down into carbon monoxide and hydrogen gas. Because of the high concentration of methanol in embalming fluids, the carbon monoxide released can give off two times as much as formaldehyde does.
Phenol: C6H5OH+ [O]→ C6H4O2
Phenol oxidizes to form a compound called benzoquinone. Benzoquinone impairs fungal mycelial growth and kills them.
Humectants: Glycerol, C3H8O3→CO2
A common humectants, like glycerol is used to retain moisture in the tissues to give a more natural look. Glycerol binds with water which many microbes used to degrade the chemical without any harm to the organism itself.
Formaldehyde is toxic to microbes as it blocks DNA replication and protein synthesis of many gram-negative bacteria and other microbes
Phenol is technically biodegradable, however, it can denature proteins and disrupt bacterial cellular membranes, essentially killing the bacteria.
Methanol in high concentration causes oxidative stress. Oxidative stress is a condition where there are too many free radicals and not enough antioxidants to neutralize them, causing cellular damage. This then in turn affects metabolic enzymes and their overall function.
Humectants have a low toxicity to microbes but they can "clog" the soil in high concentration.