Introduced
November 2022
November 2022
Corporate Sustainability Reporting Directive
Replaced the Non-Financial Reporting Directive and significantly expanded the scope and depth of corporate sustainability reporting across the EU.
CSRD Compliance
CSRD has changed.
CSRD has changed.
Here is what it means
for your organisation
The Omnibus I Directive narrowed the scope. The revised ESRS have been formally adopted. The fundamentals of what good reporting looks like have not changed.
Updated July 2026: The European Commission formally adopted the revised ESRS and the Voluntary Sustainability Reporting Standard on July 3, 2026. Both Delegated Acts are now under Parliament and Council scrutiny.
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Employees threshold for mandatory reporting
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Total datapoints reduced in revised ESRS
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Companies descoped under Omnibus I
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Revised ESRS application date
BACKGROUND
What is CSRD?
The Corporate Sustainability Reporting Directive requires large companies operating in the EU to disclose detailed environmental, social, and governance information - reported against the European Sustainability Reporting Standards.
Reporting
Standards
Standards
European Sustainability Reporting Standards
ESRS define what companies must disclose across environmental, social, and governance topics.
OMNIBUS I
MARCH 18, 2026
MARCH 18, 2026
Omnibus I Directive
Entered into force March 18, 2026. Narrowed scope to 1,000+ employee companies and adjusted reporting timelines.
REVISED ESRS ADOPTED
July 3, 2026
July 3, 2026
Revised ESRS Adopted
European Commission formally adopted the revised ESRS and the Voluntary Sustainability Reporting Standard. Over 70% fewer total datapoints. Value chain cap established.
Key Reforms 2026
Three things changed fundamentally
Two developments in 2026 fundamentally changed CSRD - the Omnibus I Directive in March and the formal adoption of the revised ESRS in July. Here is what changed and what it means in practice.
Change 01
Scope was narrowed significantly
The employee threshold rose from 250 to 1,000, with a turnover threshold of €450 million. Approximately 42,000 companies have been descoped. Listed SMEs are no longer required to report.
Omnibus I in force March 18, 2026Change 02
Reporting timelines were adjusted
Wave 2 companies move from FY2025 to FY2027, with first reports due in 2028. Wave 3 listed SMEs are fully out of mandatory scope. Wave 1 large companies continue reporting unchanged.
Wave 2 now starts FY2027Change 03
The ESRS were simplified
The revised ESRS were formally adopted on July 3, 2026, alongside a new Voluntary Sustainability Reporting Standard for smaller companies. Total datapoints reduced by over 70%. All voluntary disclosures removed. A value chain cap protects smaller suppliers.
Formally adopted July 3, 2026
SCOPE
Who is still in scope?
Understanding whether your organisation is in scope is the first conversation to have before deciding what to do next.
Key threshold
1,000+ employees
and €450 million turnover now define the core threshold for Wave 2 EU companies.
Wave 1
Large public interest entities previously under NFRD (500+ employees).
A quick-fix delegated act adopted July 11, 2025 gives additional flexibility for FY2025 and FY2026 reporting.
Reporting now
Wave 2
Large EU companies with 1,000+ employees and €450M+ turnover
This is now the main mandatory reporting cohort under Omnibus I.
Prepare now
Wave 3
Listed SMEs - fully removed from mandatory scope under Omnibus I
Mandatory CSRD reporting no longer applies. The value chain cap limits data requests from in-scope companies to what the Voluntary Sustainability Reporting Standard covers.
Out of scope
Wave 4
Non-EU companies with €450M+ EU turnover and EU subsidiary generating €200M+
Non-EU groups with substantial EU activity should monitor timing and prepare for upcoming requirements.
Monitor
Value chain note
Even companies outside mandatory scope may receive ESG data requests from customers and suppliers who remain in scope. The value chain cap limits these requests to what is set out in the voluntary standard for companies with fewer than 1,000 employees.
Formally Adopted ESRS - July 3, 2026
What the simplified ESRS actually means
The Commission's draft final ESRS represents a genuine reduction in reporting burden, but not a reduction in ambition.
Reporting burden reduced
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Total datapoints reduced in the formally adopted revised ESRS, with simplification focused on usability, not lower expectations.
Key implications
What the simplified ESRS actually changes
Voluntary disclosures removed
What remains is what is required. Nothing more. Companies can focus on material, decision-useful disclosures rather than volume.
Double materiality streamlined
A clearer top-down approach is now explicitly endorsed. Companies no longer need to analyse every individual IRO - they can assess at topic level based on strategy, sector, and geography.
Value chain cap introduced
In-scope companies cannot request more information from value chain partners with fewer than 1,000 employees than what the voluntary standard specifies.
STILL MANDATORY
What has not changed
Simplification is not the same as irrelevance. The core foundations of CSRD remain fully intact.
Double materiality is still mandatory
Companies in scope must still assess both financial materiality and impact materiality. This remains the most demanding part of CSRD preparation.
Third-party assurance is still coming
The requirement for independent assurance has not been removed. The quality bar for data is not getting lower.
Audit-ready data is still expected
Fewer datapoints means the ones that remain carry more weight. Structured, traceable data is still the foundation of credible reporting.
Investor expectations have not softened
Companies that voluntarily disclose more than the minimum will be better positioned with investors, lenders, and procurement teams.
STRATEGY
What to do now
The companies getting ahead are not waiting for final standards. Here is what they are doing.
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Immediate Priority
Complete or refresh your double materiality assessment
The simplified ESRS streamlines the process but does not remove it. If you have not done a DMA, start now. If you have, check it against the new top-down approach guidance in the formally adopted revised ESRS.
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Data Foundation
Invest in data infrastructure
Connect your sustainability data to the systems where it actually lives - ERP, HSE, energy management - rather than continuing to manage it in spreadsheets. This work pays dividends regardless of which framework you report against.
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Build for Scale
Build for multiple frameworks simultaneously
One underlying data structure that serves CSRD, GRI, and internal reporting reduces duplication and future-proofs against further regulatory change. Do not rebuild from scratch for each framework.
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Assurance Readiness
Prepare for assurance now
Third-party assurance is coming. The organisations that will navigate it well are the ones whose data is already traceable, documented, and consistently collected - not the ones scrambling to reconstruct it before the audit.
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FAQ
Frequently asked questions
The Corporate Sustainability Reporting Directive is EU legislation requiring large companies to disclose detailed ESG information reported against the European Sustainability Reporting Standards. Under the revised Omnibus I thresholds, CSRD now applies to EU companies with more than 1,000 employees and €450 million net annual turnover. Non-EU companies generating over €450 million in EU turnover with an EU subsidiary generating over €200 million are also in scope.
Omnibus I, which entered into force on March 18, 2026, made three fundamental changes: it raised the employee threshold from 250 to 1,000 employees (descoping approximately 42,000 companies), adjusted reporting timelines so Wave 2 companies now start from FY2027, and initiated the simplification of the ESRS which the Commission published in draft final form on May 6, 2026.
The European Commission formally adopted the revised ESRS on July 3, 2026. The Delegated Act is now under Parliament and Council scrutiny - a two-month period, extendable to four months - before entering into force. The revised standards apply from FY2027, with first reports due in 2028.
Yes. Double materiality remains mandatory. The process has been streamlined with a clearer top-down approach, but companies in scope must still assess both financial materiality (how sustainability issues affect the business) and impact materiality (how the business affects people and the environment).
No. Even companies outside mandatory scope face ESG data requests from customers and suppliers who remain in scope. Investor and market expectations around ESG transparency continue regardless of regulatory status. The value chain cap limits what in-scope companies can request from smaller partners, but commercial pressure to provide ESG data remains.
Yes. Non-EU companies generating over €450 million in EU turnover with an EU subsidiary or branch generating over €200 million are in scope under Wave 4, with reporting starting FY2028 and first reports due 2029. The Non-EU Group Standards (NESRS) are being developed separately, with adoption expected by October 2027.
Now. Companies preparing for FY2027 reporting need to complete or refresh their double materiality assessment, build audit-ready data collection systems, and prepare for third-party assurance - all of which take significant time to implement properly. The organisations that will report with confidence in 2028 are the ones building their data infrastructure in 2026 and 2027.
The ESRS are designed to align as closely as possible with GRI Standards, meaning established GRI reporters are well-positioned for CSRD. ISSB alignment has not been formally endorsed in the simplified ESRS - companies operating across jurisdictions will need to manage ESRS and ISSB as separate frameworks for now.
The standards are adopted.
The clock is running.
We help organisations build the data infrastructure CSRD requires, from double materiality through to audit-ready disclosure.
