How did the Omnibus I package change the CSRD?

The EU Council adopted Omnibus I on February 24, 2026, limiting the CSRD to companies with more than 1,000 employees and more than €450 million in net turnover, roughly 90% fewer companies than before. Listed SMEs are out. Wave 1 companies below the thresholds drop out from financial year 2027; member states may exempt them for 2025 and 2026.

Which companies still need to report under the CSRD?

After Omnibus I, the CSRD covers EU companies with more than 1,000 employees and more than €450 million in net turnover, around 90% fewer than the original ~50,000; newcomers first report on financial year 2027. Non-EU groups report from financial year 2028 if EU net turnover exceeds €450 million and an EU subsidiary or branch exceeds €200 million.

Does the CSRD still apply to US companies?

Yes, but far fewer than first expected. EU subsidiaries above the thresholds report in their own right. US groups report from financial year 2028 if EU net turnover exceeds €450 million and an EU subsidiary or branch exceeds €200 million. Suppliers with up to 1,000 employees can limit what they give reporting customers to the voluntary SME standard.

What happened with the first CSRD reports filed in 2025?

Wave 1 companies (large listed companies, banks and insurers with more than 500 employees, most previously under the NFRD) filed their first CSRD reports in 2025 covering fiscal year 2024. Key takeaways: the double materiality assessment proved more resource-intensive than expected, value chain data collection was a major bottleneck, and the quality of disclosures varied widely.

What is CSRD?

Status, September 2026: The EU's Omnibus I directive (in force March 18, 2026) narrows the CSRD to companies with more than 1,000 employees and more than €450 million in net turnover. The amendments apply from financial year 2027, with first reports in 2028, and member states must transpose them by March 2027. Source: Council of the EU.

Why It Matters

The CSRD was supposed to be the most ambitious mandatory sustainability reporting regime ever enacted, covering roughly 50,000 companies. That vision just got a major haircut.

On February 24, 2026, the EU Council adopted the Omnibus I simplification package, raising the reporting thresholds from 250 employees to 1,000 employees and adding a new €450 million annual revenue floor. The result: approximately 90% of companies previously in scope are now exempt. The CSRD still exists, but it's a fundamentally different regulation than what was envisioned in 2022.

This matters for two reasons. First, if your company remains in scope, the core work remains — you still need to report under the ESRS (a simplified set with about 61% fewer mandatory datapoints applies from financial year 2027), conduct a double materiality assessment, and obtain limited assurance; digital tagging follows once the EU adopts its tagging rules. Second, even if you're now exempt, the CSRD's influence doesn't stop at its legal boundaries. Companies in the value chains of in-scope firms will still face data requests. Investors still want sustainability data. And the ESRS have become a de facto benchmark for what good sustainability reporting looks like.

What Changed Under Omnibus I

The New Thresholds

Under the original CSRD, companies met the reporting threshold if they hit two of three criteria: 250+ employees, €50 million+ in turnover, or €25 million+ in total assets. The Omnibus I package replaced this with a much higher bar: 1,000+ employees AND €450 million+ in annual revenue. Both conditions must be met.

Listed SMEs, which were set to start reporting for fiscal year 2026, are now fully exempt from the CSRD. Financial holding entities also received an exemption.

Transition Relief

Wave 1 companies — those already subject to the old NFRD — that filed their first CSRD reports in 2025 but fall outside the new thresholds drop out of scope from financial year 2027, and member states may exempt them for financial years 2025 and 2026. They won't be required to continue CSRD reporting unless they meet the higher thresholds.

CS3D Delays

The companion Corporate Sustainability Due Diligence Directive (CS3D/CSDDD) also got pushed back. The transposition deadline for member states moved to July 2028, with compliance required by July 2029. Critically, the mandatory climate transition plan requirement was removed from the CS3D, though companies in CSRD scope still have to disclose a climate transition plan if they have one.

What Stayed the Same

The double materiality requirement remains, and so does third-party assurance at the limited level; Omnibus I dropped the planned move to reasonable assurance. The ESRS themselves did change: the Commission adopted a simplified set in July 2026 with about 61% fewer mandatory datapoints, applying from financial year 2027 (optional for 2026). Digital tagging will be required once the Commission adopts tagging rules. For companies that remain in scope, reporting is lighter than before but still demanding.

Lessons from Wave 1 Reports

The first round of CSRD reports landed in 2025, covering fiscal year 2024 for Wave 1 companies (large public-interest entities with more than 500 employees, most previously under the NFRD). Several patterns emerged.

Double materiality was harder than expected. Companies underestimated the time and cross-functional coordination needed for a rigorous double materiality assessment. Many treated it as a check-the-box exercise rather than a genuine strategic analysis, and the results showed.

Value chain data was the biggest bottleneck. Collecting Scope 3 emissions data, supplier social metrics, and downstream impact information proved difficult. Companies with established supplier engagement programs had a clear advantage.

Quality varied widely. Some reports were detailed, data-rich, and clearly informed by the ESRS. Others read like rebranded versions of prior sustainability reports with a thin ESRS overlay. Assurance providers flagged significant gaps in several reports.

The market noticed. Investors and ESG analysts began comparing CSRD reports across companies and sectors. Early movers with strong disclosures received favorable attention. Companies with thin or evasive reporting drew scrutiny.

How the ESRS Works

For companies that remain in scope, the European Sustainability Reporting Standards are the reporting backbone. The first set, whose 12-standard structure the 2026 simplification kept, includes:

ESRS 1 — General Requirements (principles and architecture)
ESRS 2 — General Disclosures (governance, strategy, material impacts, metrics)
ESRS E1-E5 — Environmental standards (climate change, pollution, water, biodiversity, resource use and circular economy)
ESRS S1-S4 — Social standards (own workforce, value chain workers, affected communities, consumers)
ESRS G1 — Governance (business conduct)

ESRS 1 and 2 are mandatory for all in-scope companies. The topical standards apply based on the results of your double materiality assessment. If a topic is material from either a financial impact or sustainability impact perspective, you report on it.

Omnibus I dropped the plan for mandatory sector-specific standards.

Impact on Non-EU Companies

The Omnibus I changes affect non-EU companies in several ways. The higher thresholds mean fewer non-EU companies will be directly subject to CSRD. Those that are — non-EU groups with more than €450 million in EU net turnover and an EU subsidiary or branch with more than €200 million — report from financial year 2028, in 2029, under separate standards for non-EU groups that the Commission has yet to adopt (EFRAG consulted on a draft in July 2026).

But the indirect effects remain powerful. Large EU companies still in scope need value chain data from their global suppliers. European investors and lenders continue to use CSRD-aligned data in their decision-making. And many non-EU jurisdictions are building their own sustainability reporting rules, most of them on the ISSB standards (28 jurisdictions had adopted them in some form as of April 2026).

Council Fire's Perspective

The Omnibus I rollback is a pragmatic recognition that the original CSRD scope was politically unsustainable. But it would be a mistake to read this as the EU backing away from sustainability reporting. The companies that remain in scope — Europe's largest firms — still face the world's most demanding sustainability disclosure requirements.

For companies now outside the CSRD's direct scope, the question isn't whether to do sustainability reporting, but how much and to what standard. Value chain data requests from in-scope companies will trickle down. Investors still want the data. And many companies that invested in CSRD readiness are choosing to continue reporting voluntarily because the exercise proved genuinely useful for identifying risks and opportunities.

Council Fire helps organizations assess their position under the revised CSRD scope, build or maintain ESRS-aligned reporting capabilities, and prepare for the value chain data requests that will continue flowing regardless of direct obligations.

What's Next

The CSRD's evolution isn't over. Member states must transpose Omnibus I by March 19, 2027, the simplified ESRS apply from financial year 2027, and the Commission must adopt EU limited-assurance standards by July 1, 2027. Standards for non-EU groups and the digital tagging rules are still to come.

The broader trajectory is clear: mandatory sustainability reporting is here to stay, even if the scope swings with political winds. Companies that build genuine sustainability measurement and management capabilities — rather than treating reporting as a compliance exercise — will be better positioned regardless of where the regulatory lines land.