I. Introduction: Omnibus Simplification Package
On 26 February 2025, the European Commission presented its Omnibus Simplification Package, aimed at strengthening EU competitiveness by significantly reducing the administrative and financial burden imposed on companies by sustainability legislation, in particular the Corporate Sustainability Reporting Directive (“CSRD“) and the Corporate Sustainability Due Diligence Directive (“CSDDD“).
Following the entry into force of the “Stop-the-Clock” Directive on 17 April 2025 — which immediately postponed the application of both the CSRD and the CSDDD — trilogue negotiations led to the adoption of the “Omnibus I Directive” on 24 February 2026.
Member States must transpose the CSRD-related amendments by 19 March 2027, for financial years starting on or after 1 January 2027, and the CSDDD-related amendments by 26 July 2028, with companies required to apply the new framework as from 26 July 2029. In the meantime, Belgium had already transposed the “Stop-the-Clock” Directive into national law on 12 December 2025.
This article highlights the key changes introduced by the Omnibus I Directive to both the CSRD and the CSDDD.
II. Amendments to the CSRD
a) Narrowed scope of application
Undertakings falling within the scope of CSRD are required to prepare and publish a sustainability report as part of their management report. The Omnibus I Directive significantly narrows the personal scope of this obligation.
Previously, undertakings meeting at least two of the following three criteria were in scope: (i) a balance sheet total of EUR 25 million, (ii) a net turnover of EUR 50 million and/or (iii) an average of 250 employees during the financial year. These criteria are replaced by two strict cumulative thresholds (on a consolidated basis where applicable): undertakings must exceed both a net turnover of EUR 450 million and an average of 1,000 employees during the financial year. Undertakings that do not meet these cumulative thresholds are excluded from the scope of the CSRD, even if they are listed companies.
“Wave 1” undertakings — being undertakings or issuers with (i) a balance sheet total exceeding EUR 25 million (ii) a net turnover exceeding EUR 50 million, and (iii) an average of more than 500 employees, currently subject to reporting obligations — must continue to report for financial years 2024 to 2026. Member States may however exempt those undertakings that do not exceed the new cumulative thresholds.
Financial holding undertakings whose subsidiaries have independent business models and operations may furthermore choose not to publish consolidated sustainability information, provided they have no direct or indirect involvement in the management of their subsidiaries. All subsidiaries — including listed companies — may rely on the subsidiary exemption where sustainability information is included in a consolidated report issued by their parent company.
b) Revised reporting framework
The Omnibus I Directive requires the Commission to adopt, within six months of its entry into force, a delegated act revising the European Sustainability Reporting Standards (“ESRS“), with a view to reducing the number of required datapoints, prioritising quantitative disclosures and providing clearer guidance on the application of the double materiality principle. The obligation to adopt sector-specific reporting standards is abolished and replaced by the possibility to issue non-binding sector-specific guidance.
Undertakings are furthermore permitted to omit certain sustainability information from their reports, including information constituting trade secrets, classified information or information whose disclosure would be seriously prejudicial to their commercial position, provided that specific conditions are met in each case.
c) Value chain and protected undertakings
The Omnibus I Directive introduces explicit protections for undertakings in the value chain of reporting undertakings. Undertakings that do not exceed an average of 1,000 employees and form part of the value chain of a reporting undertaking qualify as “protected undertakings” and are entitled to decline any request for information exceeding that specified in the voluntary reporting standards to be adopted by the Commission by 19 July 2026. Any contractual provision to the contrary shall not be binding.
Pending the adoption of those standards, the VSME (voluntary sustainability reporting standard for SMEs) serves as the reference framework.
Reporting undertakings may rely on a self-declaration from undertakings in their value chain to determine whether they qualify as protected undertakings, without being required to verify the accuracy of such declaration.
III. Amendments to the CSDDD
a) Narrowed scope of application and postponed deadlines
Under the CSDDD, companies falling within its scope are required to identify and address actual and potential adverse human rights and environmental impacts across their operations and value chain. The Omnibus I Directive significantly narrows the personal scope of this obligation and postpones its application.
As regards EU companies, the thresholds are raised from 1,000 to 5,000 employees and from EUR 450 million to EUR 1.5 billion in net worldwide turnover. Third-country companies are in scope only where they generate net turnover in the EU exceeding EUR 1.5 billion (instead of EUR 450 million). For franchising and licensing models, the relevant thresholds are raised to EUR 275 million in net turnover and EUR 75 million in royalties (instead of EUR 80 million and EUR 22.5 million respectively).
b) Revised due diligence methodology and abolition of the transition plan
The Omnibus I Directive replaces the previous entity-based approach with a risk-based methodology structured around two successive steps.
Companies must first conduct a scoping exercise, based solely on reasonably available information, to identify general areas across their operations, those of their subsidiaries and those of their business partners where adverse impacts are most likely to occur. This general scoping exercise does not require companies to systematically map every business partner across their value chain, and will as a general rule not involve requesting information from business partners. Based on the results of this scoping exercise, companies must then carry out an in-depth assessment limited to the areas identified as most likely to give rise to the most severe adverse impacts.
The Omnibus I Directive also removes the obligation for companies to adopt and implement a transition plan for climate change mitigation. It should however be noted that the obligation under the CSRD to disclose any transition plan that a company may have remains unchanged.
c) Liability and penalties
The Omnibus I Directive removes the EU-wide harmonised third-party liability regime previously provided for under the CSDDD. Companies’ liability for harm caused by non-compliance with their due diligence obligations will henceforth be governed exclusively by national law.
As regards penalties, Member States must provide for a maximum cap of 3% of the company’s net worldwide turnover (instead of a minimum of 5%) for infringements of the national laws implementing the CSDDD. The Commission must furthermore issue guidelines to assist supervisory authorities in determining the appropriate level of penalties.
IV. Conclusion
The amendments introduced by the Omnibus I Directive represent a fundamental shift in the EU’s approach to corporate sustainability obligations. By significantly narrowing the scope of both the CSRD and the CSDDD, simplifying their substantive requirements and postponing their application deadlines, the Omnibus I Directive substantially reduces the administrative and financial burden on companies.
These changes warrant close attention from companies currently in scope or potentially affected by the revised thresholds, as they may require a reassessment of existing reporting and due diligence frameworks. Further developments are to be expected in the coming months, in particular with the adoption of the revised ESRS and the voluntary reporting standards.
If you have any questions on the impact of these changes or your company’s position, feel free to contact the authors, Maïka Bernaerts or Elsa Plamont.
***
This newsletter does not constitute legal advice or a legal opinion. Please consult with a legal counsel of your choice before taking any action based on the information provided.