Why organisations are rethinking their CSRD obligations
When the CSRD came into force, it marked one of the biggest expansions of mandatory sustainability reporting Europe has seen. Its predecessor, the Non-Financial Reporting Directive, captured roughly 11,700 companies. The CSRD was designed to bring in a far larger population, with EU estimates putting the figure at around 50,000 once the phase-in was complete. That is a step change, not a tweak, and businesses treated it accordingly.
Plenty of teams poured real time and money into getting ready. Sustainability functions worked through double materiality assessments, finance teams started wiring ESG data into their reporting systems, and companies ran gap analyses against the European Sustainability Reporting Standards (ESRS). Momentum was building.
Then the Omnibus package changed the calculation, and it is no longer a proposal. The European Parliament approved it on 16 December 2025, the Council signed off on 24 February 2026, and the revised thresholds are now in force. That legislative journey is done. What is left is a practical question for each organisation: where do the new rules leave you?
Why the Omnibus shifts the whole conversation
The Omnibus was pitched as a simplification exercise. The aim is to keep the EU's wider sustainability goals intact while easing the compliance load on companies that were arguably facing costs out of proportion to their size.
So this was not a rewrite of what the CSRD is for. It was a recalibration of who it applies to, concentrating mandatory reporting on the largest organisations and lifting a substantial number of smaller ones out of direct scope entirely.
Which is why, for a lot of businesses, the question has quietly changed. It used to be “how do we comply?” Now it is “do we still need to?”, and for many the answer has become no.
What the adopted scope changes actually involve
Under the CSRD as originally drafted, obligations widened considerably to take in many large companies and listed small and medium-sized enterprises (SMEs), brought in through a staged timetable. The European Commission estimated this would eventually bring around 50,000 companies into mandatory reporting.
The Omnibus has now raised the bar substantially. Mandatory CSRD reporting is restricted to companies that exceed both 1,000 employees and €450 million in net annual turnover, a dual test where both conditions have to be met. The Commission's own estimate is that this removes roughly 80% of the companies previously expected to report, a figure echoed consistently by law firms and advisory bodies tracking the change. The revised rules were approved by the European Parliament on 16 December 2025, signed off by the Council on 24 February 2026, and came into force in March 2026.
Member states also have discretion to let some companies that had already started reporting under the original “Wave 1” rules, but now fall below the new thresholds, skip mandatory reporting for financial years 2025 and 2026 as a transitional measure. Worth checking directly with your national regulator if that applies to you, since implementation of this discretion varies by country.
Worth stressing, though: fewer direct reporting obligations is not the same as no sustainability reporting expectations. Those two things have a habit of drifting apart, and we will come back to that.
A practical way to work out where you stand
You can get a useful first read on your position by running through a handful of questions.
Are you an EU-based organisation?
Start with the basics: is the organisation established in the EU, or does it have reporting obligations tied to EU operations? EU-based businesses are generally more likely to fall within CSRD scope, though whether you actually do comes down to the applicable thresholds and your legal structure.
Do you meet the new size thresholds?
The Omnibus has lifted the bar so that mandatory reporting now lands only on the largest organisations. The test is a dual one: you need to exceed both 1,000 employees and €450 million in net annual turnover to remain directly in scope. Fall below either figure and you are very likely out of mandatory CSRD reporting, though it is worth checking your corporate structure and any group-level obligations before assuming you are clear (see below).
Are you part of a larger corporate group?
This one catches people out. Even if an individual subsidiary drops out of direct scope, obligations can still reach it through group reporting. A parent company preparing consolidated disclosures will often need sustainability data from its subsidiaries to do so. The practical takeaway is to assess not just your own legal entity but the wider group you sit within.
Do you have significant EU operations?
Non-EU organisations are not automatically off the hook. Activity in the European market can create reporting obligations under the CSRD framework, and while the criteria for non-EU companies differ, those with substantial EU-generated revenue or EU subsidiaries should check their position against the new thresholds directly rather than assuming they are unaffected.
Are customers already asking for ESG information?
Here is where regulation and reality diverge. Even with no mandatory obligation, many organisations keep fielding ESG data requests from customers, lenders, investors, procurement teams and supply-chain assessments. Large companies that do report tend to lean on their suppliers for the information they need to complete their own disclosures. So the expectation to report can persist regardless of whether the law requires it of you directly.
Falling outside the CSRD does not switch off ESG expectations
If there is one point worth holding onto, it is this: regulatory scope and market expectation are not the same thing, and the gap between them is widening.
Organisations well outside mandatory reporting are still seeing a steady rise in sustainability information requests. In practice these show up as investor ESG questionnaires, customer sustainability assessments, supplier due diligence, bank lending requirements, private equity reporting expectations and procurement pre-qualification exercises.
The pattern underneath all of that is a shift in what sustainability reporting is for. Increasingly it underpins commercial relationships rather than just satisfying a regulator. Seen that way, keeping your ESG information in good shape stays valuable even if your formal obligations change.
What to do if you remain in scope
If you look at those thresholds and find you are still within them, the sensible move is to keep your preparation going. The priorities that matter most are:
● Strengthening ESG governance structures
● Completing double materiality assessments
● Improving the quality of your sustainability data
● Getting ready for ESRS reporting requirements
● Tightening internal controls
● Building assurance readiness
● Developing reporting processes that work across functions
These capabilities do not go to waste even where deadlines shift for individual companies within scope. They are the foundation of credible reporting whenever your reporting year comes round.
What to do if you have fallen out of scope
If you now sit below the revised thresholds, resist the temptation to file your ESG work under “no longer needed.” A few things are still very much worth doing.
Keep building your ESG data systems. Reliable sustainability information increasingly greases customer relationships, financing conversations and procurement. Strong data capability keeps paying off well beyond compliance.
Check whether transitional relief applies to you. If you had already started reporting under the original Wave 1 rules, your member state may allow you to pause mandatory reporting for financial years 2025 and 2026 rather than requiring an immediate stop or start. This varies by country, so it is worth a direct check with your national regulator rather than assuming either way.
Hold on to your voluntary reporting capability. Many organisations carry on reporting by choice because it supports investor communication, competitive positioning, talent attraction, customer confidence, governance and risk management. It also makes life easier if thresholds move again in future and you find yourself back in scope.
Common misconceptions about the Omnibus
A few misreadings have taken hold since the changes went through, and they are worth clearing up.
The first is that the CSRD has been scrapped. It has not. The Omnibus simplifies who the directive applies to; it does not remove sustainability reporting from the statute book, and the largest companies in Europe are still very much required to report.
The second is that companies outside mandatory reporting no longer need ESG information at all. In reality, supply-chain reporting, investor expectations and customer requirements keep pulling sustainability disclosures through, sector after sector, regardless of what the law formally requires.
The third is assuming that because the legislative process is finished, there is nothing left to check. Whether transitional relief applies to your specific situation, and whether your parent company or key customers still expect ESG data from you, are both still open questions worth resolving properly rather than guessing at.
Preparing for a landscape that keeps moving
There is an opportunity in all this uncertainty. Rather than treating sustainability purely as a compliance exercise, this is a good moment to build the broader ESG capabilities that support risk management, operational resilience, stakeholder engagement, investor confidence, commercial competitiveness and long-term value.
Governance that can flex and reporting systems that can scale are likely to hold their value even as the requirements around them keep changing.
Looking beyond regulatory scope
The EU Omnibus has now answered the question it raised for so many organisations: are we still required to report under the CSRD? For roughly 80% of the companies originally expected to, the answer is now no, thanks to thresholds that limit mandatory reporting to companies with more than 1,000 employees and more than €450 million in net annual turnover.
Working out whether you are legally in scope, though, is only half the story. Customers, investors, lenders and supply-chain partners will keep expecting reliable sustainability information whether or not the law obliges you to produce it. For that reason, plenty of organisations will carry on developing their ESG capabilities regardless of their formal reporting status.
In the end, the businesses that invest in flexible governance, dependable data and solid reporting processes will be the ones best placed to meet whatever their customers, investors and lenders ask of them next, while quietly strengthening their resilience and their standing with the people who matter.