Consistent with the 9 December 2025 position, this new EU Directive includes changes to the Corporate Sustainability Reporting Directive (CSRD) employee threshold of 1,000 full-time equivalent (FTE) employees and a review clause allowing for possible extension of the scope of both the CSRD and Corporate Sustainability Due Diligence Directive (CSDDD).
With this final approval now in place, and the legislative text published in the EU Official Journal on 26 February 2026, the Directive will enter into force on the twentieth day following publication. Member states will still need to transpose the provisions into national legislation and will have one year after the Directive enters into force to complete transposition.
Since CSRD initially came into force in the European Union (EU) on 1 January 2023, there have been increasing demands to streamline the requirements and reduce the reporting burden associated with sustainability reporting.
The Omnibus package, initially released in February 2025, is intended to meet this demand for simplification. It contains proposed changes to both the CSRD and CSDDD and has undergone several rounds of negotiation within the EU legislative process to date.
In recent months, the European Parliament (EP) and EC have undergone negotiations culminating in a joint provisional agreement which was reached in December 2025, this is the agreement that has now been approved.
The final Directive contains changes to both the CSRD and CSDDD that are intended to reduce reporting burden, and are detailed below:
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Reduction in scope
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Includes thresholds of 1,000 FTE employees and net turnover of €450 million for EU entities to be in scope for CSRD reporting, which will reduce the number of entities that will be required to report compared to existing thresholds. Includes an EU net turnover threshold for non-EU entities of €450 million generated in the EU, with no associated employee threshold. |
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Information request limitation
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Includes a limitation on the information that larger entities can request from their value chain partners that are out of scope of the CSRD. Reporting entities that are in scope of the CSRD will be prevented from requesting information beyond what is required by voluntary standards from out-of-scope entities in their value chain.
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Digital portal
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The EC has agreed to establish a digital portal containing free templates, guidelines and information.
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Exemptions
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Includes:
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Review clause
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Includes a review clause allowing for possible future scope extension of the CSRD.
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| Final directive | |
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Reduction in scope
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Includes CSDDD thresholds of 5,000 or more employees and over €1.5 billion in revenue, which will significantly reduce the number of entities in scope compared to current thresholds.
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Risk-based approach
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Introduces a risk-based approach, whereby entities are only required to ask for necessary information if there is a reasonable expectation of an adverse impact on their business partners’ activities, rather than systematically asking for the required information.
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Non EU-wide liability
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Indicates that obligations arising as a result of breaches of the CSDDD will be covered under national law, rather than at the EU level. A review clause was added on the need for a harmonised EU liability regime.
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Transition plan
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Removes the previous requirement to put into effect a transition plan for climate change mitigation to be compatible with the Paris Agreement.
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Penalties
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Includes a maximum penalty cap of 3% of an entity’s net worldwide turnover.
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Delay
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Postpones the CSDDD transposition deadline by another year to 26 July 2028 with compliance required by July 2029.
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Review clause
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Includes a review clause allowing for possible future scope extension of the CSDDD.
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While this Directive has been adopted by the EC and published in the EU Official Journal, the Directive must be transposed into national legislation by each EU member state. Member states have one year after the Directive enters into force to transpose, with the exception of article 4, for which compliance is required by 26 July 2028.
We are pleased to see the EC completing this last required step in the legislative approval process. While the resulting changes to the CSRD and CSDDD may lessen certain mandatory European sustainability reporting obligations, they should not diminish overall ambition. It continues to be important that entities integrate sustainability into their core strategy and dedicating time and resources to high‑quality reporting has been consistently shown to generate long‑term value—for the business, its stakeholders, and society at large.
We have published several other alerts related to the Omnibus package. For more information, click here:
European sustainability reporting requirements have changed significantly in 2025. We have summarised the key changes across CSRD, CSDDD, ESRS and EU Taxonomy.
The 2008 financial crisis prompted a review of regulations in the banking sector. As a result, new entities entered the market offering digital solutions that combine traditional services with opportunities inherent to the online financial market.
EU Council and EU Parliament reach an agreement on CSRD and CSDDD simplification.
The ISSB has published amendments to the Greenhouse Gas Emissions Disclosure requirements of IFRS S2.
EFRAG has issued to the Commission its technical advice on revising all 12 existing ESRS.
EU Parliament furthers negotiations on proposed Omnibus changes to the CSRD and CSDDD.
EU Parliament continues negotiations on proposed Omnibus changes to the CSRD and CSDDD.
The IFRS Foundation has published educational material on disclosing anticipated financial effects when applying IFRS SDS.
EFRAG has issued Exposure Drafts (EDs) revising all 12 existing ESRS, with a 60-day public consultation period.
‘Quick-fix’ amendments to the ESRS adopted by the European Commission for Wave 1 entities.
On 10 July 2025, the IFRS Foundation published educational material about using ISSB Industry-based Guidance when applying ISSB Standards.
