Corporate Sustainability Reporting Directive: Amendments under Omnibus I finalised

10 April 2026 7 min read

By Sarah Hellewell

At a glance

The Omnibus I Amending Directive was approved by the EU Council in February 2026 and came into force on 18 March 2026.
April 2025's Stop-the-Clock Directive delayed application of the Corporate Sustainability Reporting Directive's requirements.
Omnibus I has now also narrowed the Directive's scope of application.

Introduction

The Corporate Sustainability Reporting Directive (CSRD) is intended to make sustainability reporting more consistent, comparable and useful across the EU, in a way that is closer to the financial reporting regime. It aims to shift sustainability information from a largely voluntary exercise to a regulated disclosure framework that supports risk management and accountability. The Directive amends the Accounting Directive and related instruments to expand both the number of in-scope entities and the depth of reporting required.

For global employers, the CSRD should not simply be viewed as form of ESG reporting. It drives a structured, auditable account of workforce-related risks, impacts and governance. Even for groups headquartered outside the EU, the CSRD can become relevant through EU subsidiaries, EU listings, or (in time) through the EU’s regime for certain non-EU undertakings with significant EU activity. This means HR, reward, employee relations, compliance and in-house legal teams will have to contribute to a reporting process owned by finance and governance functions, but which depends heavily on workforce data and employment practices.

Key requirements under the Directive as originally enacted

As adopted in December 2022, the CSRD significantly expands sustainability reporting beyond the earlier 'non-financial reporting' (NFR) regime. It does this primarily by requiring more undertakings to report and by specifying a more detailed content framework.

In terms of coverage, CSRD was widely expected to bring nearly 50,000 companies into scope, compared with around 11,000 under the NFR regime. As originally enacted, CSRD applied to:

All 'large' undertakings and groups meeting the relevant balance sheet / net turnover / average employee thresholds, whether listed or not.
SMEs with transferable securities admitted to trading on an EU regulated market, excluding micro-undertakings, with a transitional option for listed SMEs to defer reporting for financial years beginning before 1 January 2028.
Certain non-EU (third-country) undertakings with net turnover of more than EUR 150 million in the EU, where the group has an EU presence via a qualifying subsidiary or (if no qualifying subsidiary) a branch meeting the applicable turnover threshold.

The Directive requires in-scope entities to include sustainability reporting within the management report, aligned to EU sustainability reporting standards (ESRS). The ESRS provide the detailed disclosure architecture, including significant workforce-related content.

A central concept of the CSRD is 'double materiality' under which reporting is intended to cover both financial materiality (how sustainability matters affect the business) and impact materiality (the impact of the business on people and the environment). For employers, this requires people issues such as health and safety, working time, retention, capability, diversity, pay practices, freedom of association and workforce engagement to be considered as part of a structured assessment of impacts, risks and opportunities, with the expectation that material topics will be supported by measurable disclosures.

The CSRD also requires reporting of matters outside a business's own legal entity, requiring reporting on material impacts, risks and opportunities across its value chain. For HR and employment counsel, identifying the value chain is crucial and contingent labour models, labour supply chains, and labour standards in outsourced service arrangements are likely to be part of the reporting narrative and metrics.

Even before later simplification initiatives, the CSRD / ESRS framework created various pressure points for global employers, for example:

Data quality and comparability such as harmonising headcount and turnover definitions across countries.
Aligning HR policies and employee relations positions with what is disclosed.
Documenting governance over workforce issues (roles, escalation routes, board oversight).
Being prepared for external scrutiny given that sustainability reporting is likely to be used by investors and other stakeholders.

February 2025 Omnibus Package

In February 2025, the European Commission launched a package of proposals in its 'Omnibus' initiative aimed at streamlining sustainability-related reporting and compliance burdens, including in relation to the CSRD. The aim of the Omnibus was to adjust timings and proportionality, reducing burdens on smaller companies or undertakings close to the thresholds but preserving progress towards standardised, comparable sustainability disclosures.

Stop-the-Clock Directive

The Stop-the-Clock Directive (SCD), adopted and published in April 2025, forms part of the EU’s legislative response to concerns about timing and implementation of the CSRD. It postpones certain CSRD phased application dates, giving companies and Member States additional time before further tranches of entities are required to report.

Omnibus I CSRD and CSDDD Simplification Directive

The Omnibus I Amending Directive (Omnibus I), approved by the EU Council in February 2026 and in force on 18 March 2026, makes substantive simplification amendments to the CSRD framework (as well as separate changes to the CSDDD). Key changes of relevance to employers impact scope and timing of workforce disclosures.

Scope

Net turnover and headcount thresholds: Omnibus I tightens the CSRD’s mandatory reporting perimeter so that (from its revised application date) sustainability reporting is required only for undertakings (and, for groups, parent undertakings on a consolidated basis) that exceed net turnover of EUR 450,000,000 and have an average of more than 1,000 employees during the financial year. In practice, this takes many undertakings out of mandatory CSRD reporting that would previously have been in scope simply because they qualified as 'large' under the Accounting Directive size tests. The employee-threshold shift (from 250 to 1000 employees) is relevant for HR teams because it is often employee headcount that causes borderline entities to be pulled into scope. For global groups, this change may remove some mid-sized EU subsidiaries from the CSRD reporting obligations or defer the point at which reporting becomes mandatory.
Listed SMEs: Omnibus I removes the prior CSRD application pathway for listed SMEs from the reporting timetable. As a result, listed SMEs that do not meet the post‑Omnibus I thresholds (EUR 450,000,000 net turnover and an average of more than 1,000 employees) should fall outside mandatory CSRD reporting.
Practical effect on workforce disclosures: Although the detailed rules on what must be disclosed are primarily found in the ESRS (rather than in the CSRD itself), the simplification measures materially affect employment and workforce obligations by changing who must undertake the exercise and when. Where entities fall out of scope (or have their first reporting year delayed), the immediate pressure to produce workforce datasets reduces. However, two important points for businesses to note are –
- Supply chain and value chain expectations do not disappear because a particular subsidiary falls out of mandatory reporting scope. Commercial counterparties (including those covered by CSRD) may still ask for workforce-related information contractually.
- In-house teams should assume that, for in-scope entities, workforce disclosures will continue to be among the most scrutinised parts of sustainability reporting, because of their connection to culture, conduct, remuneration, retention, industrial relations and litigation risk.

Timing

Following SCD and Omnibus I, timing of application of CSRD is as follows (but note that national transposition will affect the precise position in each Member State):

Undertakings already in the first CSRD wave (ie public‑interest entities with more than 500 employees on average, including parent undertakings of large groups with more than 500 employees on average): first report for financial years beginning on or after 1 January 2024 (ie reports published in 2025 for calendar‑year reporters). Under Omnibus I, this 'first wave' application is expressly framed as applying to financial years starting between 1 January 2024 and 31 December 2026.
Undertakings that would previously have been the second CSRD wave (ie other large undertakings and other parent undertakings of large groups): under the SCD, first reporting is postponed by two years and is therefore expected to begin for financial years beginning on or after 1 January 2027 (ie reports published in 2028 for calendar‑year reporters).
From financial years beginning on or after 1 January 2027 (post‑Omnibus I scope): sustainability reporting is required only for undertakings (or, for groups, parent undertakings on a consolidated basis) that exceed net turnover of EUR 450,000,000 and have an average of more than 1,000 employees during the financial year.
Listed SMEs (by headcount, typically below 1,000 employees): under Omnibus I, the prior CSRD pathway for listed SMEs is removed from the application timetable. So, listed SMEs that do not meet the post‑Omnibus I thresholds should be outside mandatory CSRD reporting, but this is subject to any Member State choices within the transposition framework and indirect ‘value chain’ data requests from CSRD reporters.

Next steps

Despite the measures adjusting timing and proportionality, EU sustainability reporting continues to move towards more standardised, decision-useful disclosure. Even though the legal obligation is likely to sit with a business's finance and governance functions, CSRD preparedness still involves significant people-and-data elements.

In practical terms, HR and employment counsel are recommended to use the current window created by delayed phase-in and simplification to take steps such as:

Mapping likely CSRD reporting obligations after the employee-threshold changes.
Pressure-testing workforce data availability and consistency. This will include information on headcount, turnover, training, pay and diversity metrics, health and safety, engagement and representation structures.
Documenting governance and controls over workforce-related disclosures so that they meet assurance standards.
Aligning external disclosures with internal policy positions to reduce employee relations and litigation risk.