On 16 December 2025, the European Parliament took a historic step by adopting the provisional agreement on the ‘Omnibus I’ package. This text marks a significant simplification of sustainability reporting requirements, responding to criticism of administrative burdens. However, this new version is also much less ambitious in terms of supporting the transition (at least 80% of the companies initially concerned are now excluded from the scope) and will pose real difficulties for the collection of sustainability data.
The initial objectives of the CSRD
The initial objective of the Corporate Sustainability Reporting Directive (CSRD) is to place sustainability information on the same level as financial information. Originally, this regulation aimed to promote a sustainable European economy by providing a clear framework for social and environmental transparency. By harmonising reporting, the EU wants to ensure international comparability of data and provide investors with a reliable strategic management tool. Another challenge is to combat greenwashing.
Why did the European authorities decide to revise the CSRD?
The decision to revise the CSRD via the Omnibus package was motivated by competitiveness imperatives. The European authorities considered that the administrative and financial burden on companies, particularly medium-sized companies (ETIs), and SMEs in their value chain was likely to be disproportionate.
The aim of this revision is therefore to refocus the system on the largest companies, thereby reducing the number of companies initially subject to legal obligations by around 80%. The aim is to provide a framework that is easier to understand and implement, while avoiding overwhelming companies with excessive data requests.
The steps leading to the adoption of the Omnibus and the revision of the CSRD
The legislative process took place throughout 2025, according to the following milestones provided by sources:
- 26 February 2025: The European Commission presents the proposed Omnibus Directive.
- 3 April 2025: The European Parliament adopts the Stop-the-Clock proposal, enacting a two-year postponement for certain waves of companies.
- 9 December 2025: A provisional agreement is reached between the Council and the European Parliament on the final text.
- 16 December 2025: Final vote by the European Parliament in plenary session.
- Future timetable: Publication in the Official Journal (OJEU) is scheduled for March 2026, followed by national transposition by Member States within 12 months.
Reminder of the obligations initially planned before the adoption of the Omnibus
Before the revision introduced in 2025, the scope of the CSRD was significantly more restrictive for the European economic fabric than in its current version:
- Low application thresholds: The directive was initially intended to apply to companies meeting two of the following three criteria: more than 250 employees, €25 million in total assets or €50 million in turnover.
- Inclusion of SMEs: Small and medium-sized listed companies (wave 3) were included in the scope of application with a reporting obligation scheduled for 2027.
- Companies had to comply with all ESRS (European Sustainability Reporting Standards), including numerous mandatory data points and specific sectoral standards currently under development.
- Timeline: ‘Wave 2’ (large unlisted companies) was initially required to publish its first reports well before the 2028 deadline now set.
New CSRD requirements following adoption of the Omnibus
The adopted text radically transforms reporting requirements:
- Significant increase in thresholds: From now on, only European companies with more than 1,000 employees and annual net turnover exceeding €450 million are subject to the requirements. For companies outside the EU, the threshold for turnover generated in the Union is also set at €450 million.
- New timetable: For Wave 2 companies, the first publication is postponed to 2028 based on data from the 2027 financial year.
- Simplification of ESRS standards: Sources indicate a drastic reduction in technical complexity, with the removal of approximately 70% of the data points initially planned. The double materiality analysis is also simplified by a top-down approach.
- Protection of SMEs (Value Chain Cap): A capping mechanism prohibits large companies from requiring information from their suppliers with fewer than 1,000 employees that exceeds the scope of the voluntary VSMEstandard. SMEs thus have a genuine ‘right of refusal’ in the face of excessive questionnaires.
- Exemptions and options: Listed SMEs and financial holding companies are officially excluded from the mandatory scope. Financial institutions have an opt-out option until 31 December 2027, allowing them not to publish detailed KPIs if they do not claim to have activities aligned with the Taxonomy.
- Green taxonomy: A financial materiality threshold of 10% is introduced for assessing the eligibility and alignment of economic activities.
Next operational steps: the implementation agenda
With the legislative framework now stabilised, the technical implementation phase is underway on several parallel fronts.
- National transposition (deadline 2026): Member States have one year from publication in the OJEU to transpose the new directives into their national law, potentially leading to variations in interpretation and application across jurisdictions.
- Validation of the revised ESRS standards (mid-2026): The European Commission must transform EFRAG's technical opinion into an official delegated act, giving the simplified standards binding legal force. This technical step is crucial in order to provide companies with the definitive set of standards.
- Deployment of the ESRS Knowledge Hub digital portal: In early December 2025, EFRAG launched this centralised portal designed to consolidate all standards, application guides and frequently asked questions. This tool aims to facilitate the practical adoption of the standards by practitioners.
- Review clause (horizon 2031): The current application thresholds may be revised by the European Union, introducing an evolutionary dimension to the system. This review clause will allow the scope to be adjusted based on feedback and changes in the economic context.
Strategic implications: beyond the legal obligation
Despite the legal exclusion of around 80% of the companies initially concerned, sustainability reporting remains a major economic issue, now referred to as a ‘passport to market access’.
Voluntary commitment to a structured reporting approach remains strategically relevant for several converging reasons.
- Securing the value chain: The Value Chain Cap mechanism standardises the expectations of major contractors around the VSME framework. Early mastery of this standard makes it possible to respond effectively to customer requests and protect against potentially more demanding ad hoc questionnaires.
- Privileged access to financing: Banks and institutional investors will continue to use ESG data to assess non-financial risks in their capital allocation decisions. A company that documents its ESG performance according to recognised standards will have easier access to green financing, preferential pricing conditions or credit lines dedicated to the transition.
- Strategic performance management: Reporting is an internal management tool that can be used to structure a coherent ESG roadmap, unite teams around common goals and measure progress over time.
- Proactive management of reputational risks: A lack of transparency exposes companies to controversy from aware consumers, employees who are attentive to their employer's commitments, and an increasingly vigilant civil society. Voluntary transparency is a form of reputational insurance.
Conclusion: a pragmatic balance between ambition and feasibility?
The reform of the CSRD via the Omnibus package marks a pragmatic shift in the European strategy for non-financial transparency. By focusing legal obligations on very large companies while creating a structured voluntary ecosystem for other players, the European Union is attempting to reconcile environmental ambition with competitiveness imperatives.
The success of this revised architecture will depend on the ability of companies to embrace the simplified standards and of financial players to promote voluntary initiatives beyond the strict regulatory scope. In a context of accelerated transition, transparency remains a strategic differentiating asset, regardless of formal obligations.
