Parliament Approves Agreement on Omnibus I Package:
On 16 December 2025, the European Parliament formally adopted the agreement reached with the EU Council on the Omnibus I Package to cut certain corporate sustainability reporting and due diligence obligations. This marks the finalisation of the new rules which will significantly narrow the scope of mandatory sustainability reporting and streamline the requirements for affected companies.
Key Amendments to Existing CSRD1 Requirements:
Scope Redefined:
- Only EU companies employing on an average more than 1,000 employees and with net annual turnover exceeding €450 million will be required to carry out mandatory sustainability reporting.
- The rules also apply to non-EU companies with net turnover in the EU exceeding €450 million, as well as their subsidiaries and branches generating turnover higher than €200 million in the EU.
- Listed Small & Medium Enterprises as well as financial holding undertakings are now excluded from the scope of the CSRD.
Simplified Reporting Framework:
- Reporting obligations under CSRD will be significantly reduced through the revised European Sustainability Reporting Standards (ESRS).
- The European Financial Reporting Advisory Group (EFRAG) have submitted the final technical advice on the simplified ESRS to the EU Commission.
- Main changes include among others, a 61% reduction in the mandatory datapoints and a complete removal of voluntary datapoints.
- These simplified ESRS will take effect once the European Commission adopts them through a Delegated Act.
Assurance Requirements:
- Companies in scope of the CSRD must continue to receive Limited Assurance on the reported Sustainability Information from an Independent Assurance Service Provider.
- The deadline for the EU Commission to adopt Assurance Standards is now set to 1 July 2027.
- The provision for Reasonable Assurance has been removed.
Voluntary Sustainability Reporting:
- Companies falling out of the scope of the amended Directive may still choose to report sustainability information voluntarily.
- Until formal standards for voluntary reporting are adopted, the Commission recommends using the VSME (Voluntary reporting standards for SMEs) which was developed by the EFRAG for companies with fewer than 250 employees.
- Sector-specific reporting standards are no longer mandatory
Value Chain Cap:
- Firms falling out of scope of the CSRD reporting according to VSME may refuse requests from larger business partners to provide information beyond what is included in the voluntary reporting standards.
Other Provisions:
- Wave 12 companies that newly fall out of scope of the CSRD may be exempt from reporting for the financial years 2025 and 2026, provided these exemptions are transposed by Member States through national laws.
- Wave 23 companies currently facing relief from the ‘Stop-the-Clock’ Directive’4 no longer need to report unless thy meet the revised thresholds. Reporting timeline for those companies that will remain under the revised threshold is 2028 (FY 2027).
- A review clause allows for possible future expansion of the CSRD’s scope.
Next Steps5
The amendments will be published in the Official Journal of the European Union and are expected to enter into force 20 days after publication. Member States are then required to transpose the amendments into national law within 12 months of their entry into force.
The European Commission is also expected to adopt the simplified ESRS by mid-2026.
1 Corporate Sustainability Reporting Directive
2 Large Public Interest Entities previously subject to the NFRD
3 Other large companies
4 Directive offering a 2-year postponement of current reporting requirements to Wave 2 Companies and listed SMEs
5 Next Steps outlined are indicative and subject to change
Sources: https://data.consilium.europa.eu/doc/document/ST-16702-2025-INIT/en/pdf; Commission presents voluntary sustainability reporting standard to ease burden on SMEs – Finance ; Simplification: Council gives final green light on the ‘Stop-the-clock’ mechanism to boost EU competitiveness and provide legal certainty to businesses – Consilium; efrags-cover-letter-to-the-amended-esrs-final-3-december-2025.pdf
