The EU’s Omnibus I deal is now enacted legislation, not just a political compromise. It narrows which companies must report under the Corporate Sustainability Reporting Directive (CSRD) and eases several due-diligence duties under the Corporate Sustainability Due Diligence Directive (CSDDD). It does not end sustainability reporting or exempt every smaller company: the two directives have different thresholds and obligations.
What did the EU sustainability reporting compromise change?
Parliament and Council negotiators reached a provisional political agreement on 9 December 2025. Parliament approved the text at first reading on 16 December 2025, the Council approved it on 24 February 2026, and the amending directive was published in the Official Journal on 26 February and entered into force on 18 March 2026. Those are separate milestones: the December announcement described a provisional deal, while the later approvals and publication made it legislation.
The changes concern two distinct regimes. The CSRD requires sustainability reporting; the CSDDD requires certain large companies to conduct due diligence on adverse impacts in their activities and chains of activities. A company may need to assess each regime separately.
What are the new CSRD and CSDDD thresholds?
| Rule set | EU companies | Non-EU companies | Main obligation |
|---|---|---|---|
| CSRD reporting | More than 1,000 employees on average and net annual turnover above €450 million. | Net turnover in the EU above €450 million; the adopted text also refers to subsidiaries and branches generating more than €200 million in EU turnover. | Report on sustainability matters under the applicable reporting rules. |
| CSDDD due diligence | More than 5,000 employees and net worldwide turnover above €1.5 billion. | Net turnover in the EU above €1.5 billion. | Conduct risk-based due diligence on adverse impacts in activities and chains of activities. |
The employee-and-turnover test for EU companies is a combined threshold, not an either/or test. The CSDDD turnover measure for EU companies is worldwide turnover; for non-EU companies, the stated measure is EU turnover. These thresholds should not be substituted for one another.
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Which companies still have to report under CSRD?
EU companies that meet both revised criteria remain within the CSRD scope. For non-EU companies, the adopted text sets out a separate EU-turnover test and also refers to subsidiaries and branches with more than €200 million in EU turnover. Financial holding undertakings are exempted.
Some companies had already started reporting for financial year 2024 under the earlier scope but fall outside the revised one. They receive a transition exemption for financial years 2025 and 2026. This is a time-limited transition for that group, not a general suspension of reporting.
Does the deal exempt smaller companies from sustainability reporting?
No blanket exemption applies to every smaller company. Companies outside mandatory scope may report voluntarily. The revised rules also protect value-chain companies with fewer than 1,000 employees from being asked for information beyond what the voluntary reporting standard covers. In practice, an in-scope business cannot use its reporting obligation to require a smaller value-chain partner to provide more information than that standard encompasses.
This cap concerns information requests under the value chain; it does not itself make a smaller company subject to the CSRD. Whether a business has its own mandatory reporting duty still depends on the applicable scope rules.
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How does the CSDDD due-diligence requirement change?
Focus on likely or severe impacts
Instead of requiring comprehensive mapping of the entire chain, the revised approach directs companies to focus on areas where adverse impacts are most likely or most severe. Companies may conduct a general scoping exercise and are to rely on information that is reasonably available. If impacts in different areas appear equally likely or severe, the Council’s summary says a company may prioritize impacts involving direct business partners.
Climate plans, liability and penalties
- The deal removed the obligation to adopt a climate-change mitigation transition plan under the CSDDD.
- It removed the EU-harmonised liability regime, leaving civil liability at national level.
- It capped penalties at 3% of a company’s net worldwide turnover.
Application timing
Official summaries describe the timing in different ways. The Council’s December 2025 provisional-agreement release said member states were to transpose the rules by 26 July 2028 and that companies would comply by July 2029. Parliament’s summary states application from 26 July 2029. These formulations refer to distinct legal steps and should not be collapsed into one date; companies should consult the operative directive and current national transposition guidance for the rules and dates applicable to them.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What does the later ESRS revision mean?
On 3 July 2026, the European Commission announced that it had adopted revised European Sustainability Reporting Standards (ESRS) and a voluntary reporting standard for smaller companies. The Commission said the measures would be submitted to Parliament and the Council for scrutiny for two months, with a possible extension of a further two months. That announcement described a scrutiny step; it does not by itself establish that the revised standards had become applicable.
The Commission published the following estimates for the revised ESRS:
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- More than 70% fewer datapoints overall.
- An expected reduction of more than 30% in reporting costs per company. This is an expectation, not a measured saving.
These are Commission-reported estimates, not guarantees of the reduction any particular company will experience.
Why was the compromise presented as a simplification?
Denmark’s Minister for European Affairs, Marie Bjerre, described the agreement as removing burdens and rules and helping create a more favourable business environment. Industry minister Morten Bødskov said simpler rules would let companies focus on their core business and support investment and growth. Those are the ministers’ political characterizations of the deal, not independently measured findings that the changes caused greater competitiveness or investment.
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