CSRD after Omnibus I: what really changes in 2026
In brief — the key points
- The Council of the EU gave final approval to the Omnibus I package on 24 February 2026, the day after this article was written. Publication in the Official Journal of the EU is imminent.
- The CSRD is not disappearing — it is refocused on very large companies (> 1,000 employees AND > €450m net turnover).
- Around 80% of the companies originally in scope fall outside the mandatory legal scope.
- The ESRS are slimmed down by 60 to 70% of their datapoints — but double materiality and limited assurance are maintained.
- Leaving the legal scope does not mean escaping economic pressure: banks, investors and customers continue to demand ESG data.
Background: why Omnibus I?
The CSRD, adopted in 2022, was meant to impose sustainability reporting obligations on around 50,000 European companies, in three successive waves. From 2024 onwards, pressure built up from companies and several Member States to lighten what they saw as an excessive administrative burden, against a backdrop of tough international competition.
The European Commission responded by launching the Omnibus I package, combining two levels of intervention: an emergency postponement of deadlines (the “stop-the-clock”) and a substantive overhaul of thresholds and standards.
France had transposed the CSRD through Ordinance No. 2023-1142 of 6 December 2023. This transposition will have to be revised within 12 months of the Omnibus I directive being published in the Official Journal of the EU.
Timeline: what happened, step by step
| Date | Event |
|---|---|
| 26 February 2025 | The European Commission publishes its Omnibus I proposal |
| 3 April 2025 | The European Parliament adopts the “stop-the-clock” |
| 13 November 2025 | The European Parliament sets its negotiating mandate for the substantive revision |
| 9 December 2025 | Provisional agreement in trilogue (Parliament / Council / Commission) |
| 16 December 2025 | Final adoption by the European Parliament (428 in favour, 218 against, 17 abstentions) |
| 24 February 2026 | Formal approval by the Council of the EU |
| Coming weeks | Publication in the Official Journal of the EU (entry into force 20 days later) |
The new CSRD scope
New thresholds
The sustainability reporting obligation now applies to companies meeting both of the following criteria:
- More than 1,000 employees
- Annual net turnover above €450 million
This is a cumulative double criterion — both conditions must be met at the same time. It is a structural change from the previous system, where two out of three criteria were enough.
For non-EU companies, the threshold is set at €1.5 billion of turnover generated in the EU.
A review clause is planned for 2031, leaving open the possibility of changing the thresholds in the future.
The figures
Around 80% of the companies originally covered by the CSRD fall outside the mandatory scope — a drop from ~50,000 to ~10,000 companies in Europe. The vast majority of mid-sized companies and large SMEs are now excluded.
New application timeline
| Wave | Companies covered | First report |
|---|---|---|
| Wave 1 | Large listed companies (already reporting) | 2025 (financial year 2024) — maintained |
| Wave 2 | Large unlisted companies > 1,000 employees and > €450m turnover | 2028 (financial year 2027) |
| Wave 3 | Non-European companies > €1.5bn turnover in the EU | 2028 (financial year 2027) |
Simplification of the ESRS
EFRAG (European Financial Reporting Advisory Group) adopted its proposal for revised standards on 28 November 2025 and submitted it to the European Commission on 4 December 2025. The Commission is to turn this technical advice into an official delegated act by mid-2026, for application to financial year 2027.
What changes
A sharp reduction in required data. Around 60% of mandatory datapoints are removed, along with 100% of voluntary datapoints. Overall, the volume of data to report falls by about 70% compared with the original standards.
A new approach to double materiality. The assessment remains mandatory, but the method changes: from an exhaustive “bottom-up” approach to a more flexible “top-down” approach based on the company’s business model.
Undue cost or effort clause. Companies will be able to formally justify the absence of certain data if collecting it is deemed too complex or costly — particularly for value chain data (Scope 3), where the use of estimates is now allowed.
Fair presentation principle. Drawing on international financial standards (ISSB), the texts introduce the objective of fair presentation: the auditor confirms that the report gives an honest picture of the business model, rather than mechanically checking every datapoint.
What is maintained
- Double materiality as a structuring principle.
- Limited assurance — the audit scope shrinks mechanically as datapoints are removed, but external verification remains mandatory.
What disappears (for now)
Sector-specific standards are postponed indefinitely and become optional for the time being. EFRAG is to present a new roadmap. These standards are still expected, to ensure comparability between companies in the same sector.
Protecting SMEs: the Value Chain Cap
Even outside the legal scope, SMEs and mid-sized companies risked indirect pressure from their large customers subject to the CSRD — in the form of increasingly demanding ESG questionnaires.
Omnibus I responds with a new mechanism: the Value Chain Cap. It formally prohibits companies subject to the CSRD from requiring suppliers with fewer than 1,000 employees to provide information beyond the VSME standard (Voluntary Standard for SMEs, developed by EFRAG).
In practice, this gives SMEs a right to refuse disproportionate requests. For large groups, it standardises their expectations: they may only request additional data as a last resort, and must give priority to information already available or to sector estimates.
The VSME standard thus becomes a double lever: a compass for voluntary reporting for SMEs, and a shield against excessive demands from their business partners.
What research says
Mandatory reporting and foreign investment
A study by DeFond, Hung and Wang, published in The Accounting Review (vol. 101, no. 1, January 2026, pp. 285-313), analyses the impact of the NFRD — the CSRD’s predecessor — on institutional investment behaviour.
Key findings:
- Mandatory sustainability reporting increased the share of foreign institutional investors in the companies concerned.
- The effect is significantly stronger in countries where sustainability information is integrated into the annual report (combined reporting) — this format lowers information-processing costs and improves comparability between companies.
- No significant effect was observed for domestic investors.
What this implies: for companies that keep reporting on sustainability voluntarily despite regulatory relief, ESG transparency is a tangible economic signal for attracting international capital.
The view of the European Scientific Advisory Board on Climate Change
The European Scientific Advisory Board on Climate Change stresses that sustainability reporting is not a compliance exercise but essential infrastructure for managing climate risks. It recommends fully integrating this logic into financial supervision, regardless of the current regulatory relief.
Next steps
| Deadline | Event |
|---|---|
| Coming weeks | Publication in the OJEU — entry into force 20 days later |
| Mid-2026 | Adoption of the official delegated act on the revised ESRS |
| 2026 | National transposition by Member States (including France) |
| 2028 | First reporting under the new thresholds (financial year 2027) |
Leaving the legal scope does not mean escaping the pressure
For companies falling below the new thresholds, the legal obligation disappears — but economic expectations do not. Three realities remain:
Funders still demand ESG data. Banks and institutional investors build sustainability criteria into their lending and allocation decisions. A company unable to provide reliable data faces an implicit risk premium and reduced access to green finance.
Customers have standardised requirements. The Value Chain Cap protects SMEs against disproportionate requests, but the VSME standard is becoming the minimum benchmark expected by large groups subject to the CSRD. Mastering this standard means anticipating legitimate requests while protecting yourself from excessive questionnaires.
Reputation is also at stake beyond legal obligations. Pressure from employees, consumers and civil society does not follow the legislative calendar. A lack of transparency creates real reputational risks, whatever the regulatory status.
Conclusion
Omnibus I does not put an end to European sustainability reporting. It redefines its mandatory scope — but not the market dynamics that give it value.
Fewer obligations for some companies do not mean less exposure to climate, financial or reputational risks. The real question for management is no longer only regulatory: what information is needed to manage risks, attract capital and remain credible in an economy in transition?
Sources: Council of the EU, European Parliament, European Commission, EFRAG, DeFond / Hung / Wang (The Accounting Review, 2026), European Scientific Advisory Board on Climate Change, economie.gouv.fr.