---
title: The CSRD, the ESRS and the Omnibus package
description: Double materiality still defines the ESRS. Omnibus I raised the thresholds to 1,000 employees and EUR 450 million and kept limited assurance.
author: Nina Szadurska
url: https://esgdo.com/expert-analysis/the-eus-reporting-revolution-the-csrd-the-esrs-and-the-omnibus-package
---

![Image for The EU’s Reporting Revolution: The CSRD, the ESRS and the Omnibus Package](https://esgdo.com/images/blog/EU_Reporting_Revolution_EN.webp)

# The EU’s Reporting Revolution: The CSRD, the ESRS and the Omnibus Package

Written by Nina Szadurska on 29 October 2026.
 Posted in [Expert Analysis](https://esgdo.com/expert-analysis).

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# The EU’s Reporting Revolution: The CSRD, the ESRS and the Omnibus Package

*The architecture of the EU sustainability regime, the double materiality principle and the dynamics of deregulation*

The European Union has set the standards for [non-financial reporting](https://esgdo.com/expert-analysis/the-evolution-of-the-concept-of-sustainable-development-from-csr-to-the-rigid-frameworks-of-esg-and-sdgs) worldwide. The CSRD and the European Sustainability Reporting Standards (ESRS) have redefined the duties of the management boards of thousands of companies. EU sustainability rules have not stayed the same. In recent years, the Omnibus I package and the “stop-the-clock” directive have changed them in significant ways. In this article I take a close look at the EU reporting system, from the double materiality principle, through the structure of the ESRS and the role of EFRAG, to the latest changes to the scope thresholds.

## Sustainability reporting in the European Union

## The scope and development of non-financial reporting rules under the NFRD and the CSRD

The basic legal act governing corporate sustainability reporting in the European Union is Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 on corporate sustainability reporting (the Corporate Sustainability Reporting Directive, “CSRD”). It was adopted in response to the limitations of the earlier Directive 2014/95/EU of 22 October 2014 on the disclosure of non-financial and diversity information (the Non-Financial Reporting Directive, “NFRD”), the EU’s first attempt to align corporate non-financial reporting. The NFRD applied to large public-interest entities with more than 500 employees and left them considerable freedom over the standards, scope and form of their reporting on environmental, social, employee, human rights and anti-corruption matters. In its report on proposals for a relevant and dynamic EU sustainability reporting standard-setting, EFRAG found that the NFRD did not set out disclosure requirements in enough detail. The result was reports that were not comparable, inconsistent and often incomplete, and the directive fell short of its goal of a more transparent market. The EU legislator responded with the CSRD, which in its original form significantly widened the range of companies in scope and introduced uniform European sustainability reporting standards (the ESRS).

## Subject-matter scope of the CSRD

The NFRD introduced the idea of reporting on the basis of [double materiality](https://esgdo.com/expert-analysis/what-is-vsme#vsme-vs-esrs), and the CSRD strengthened it through the uniform ESRS, which rest on a parallel analysis of financial materiality and impact materiality. At the global level, however, not every standard has adopted the principle (see Table 5). The ISSB standards reflect the financial materiality perspective. The GRI standards focus on impact materiality, that is, a company’s effect on the environment and society.

Table 5. Financial materiality and impact materiality

| Standard | Materiality perspective |
| --- | --- |
| ESRS | A parallel analysis of financial materiality and impact materiality |
| ISSB standards | The financial materiality perspective |
| GRI standards | Impact materiality, that is, a company’s effect on the environment and society |

Double materiality requires companies to consider both the actual and potential financial risks arising from environmental, social and economic matters (financial materiality) and the actual and potential impacts of their activities on those same areas (impact materiality). A company therefore reports on its impacts whether or not they are financially material, so that stakeholders get a full picture of its non-financial impacts, risks and opportunities.

## Entities covered by the CSRD

The CSRD extends the reporting obligation in stages to further categories of companies, well beyond the narrow group of public-interest entities covered by the NFRD. In its original form, the first to report were large public-interest entities with more than 500 employees that exceeded at least one of two criteria: a balance sheet total of EUR 20 million or annual revenue of EUR 40 million. These were the companies already subject to the NFRD, and they published their first mandatory sustainability reports for 2024. Next came all other large companies meeting at least two of three criteria: more than 250 employees, a balance sheet total above EUR 20 million and annual revenue above EUR 40 million. For 2026 (reporting in 2027), [listed small and medium-sized companies](https://esgdo.com/tutorial/how-to-prepare-esg-report-sme#csrd-vs-sme) were to follow, under a two-of-three test of more than 10 employees, a balance sheet total above EUR 350,000 and annual revenue above EUR 700,000. The last phase was to cover selected non-EU companies that generate more than EUR 150 million in the EU and have a subsidiary or branch there, with the first reports for 2028 due in 2029.

Sustainability reporting forms part of the management report and must be verified by a statutory auditor under Article 34 of Directive 2013/34/EU, as amended by the CSRD. The current standard is limited assurance. Under limited assurance, the auditor carries out fewer procedures than for reasonable assurance. The conclusion is usually negative in form. Nothing has come to the auditor’s attention suggesting that the information is materially misstated. The original CSRD treated limited assurance as transitional and required the Commission to adopt reasonable assurance requirements by delegated act. Omnibus I abandoned that plan. Directive (EU) 2026/470 repealed the Commission’s obligation to adopt reasonable assurance standards. Limited assurance is the final standard in EU law. The Commission must adopt harmonised limited assurance standards by 1 July 2027.

## The Omnibus legislative package: narrowing the reporting obligations

On 26 February 2025, the European Commission presented the draft “Omnibus I” package, proposing changes to the CSRD, the CSDDD and the implementing acts under the EU Taxonomy Regulation. It has three parts. The first is Directive (EU) 2025/794 (the “stop-the-clock” directive), which postpones the reporting obligations of the second and third waves. The second is COM(2025) 81 final, a proposal to simplify and limit sustainability reporting and due diligence requirements by amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760. The third amends the delegated acts under Regulation (EU) 2020/852 (the EU Taxonomy).

Directive (EU) 2025/794 of 14 April 2025 postponed the reporting obligations of second-wave companies by two years. Under Article 5(2) of the CSRD, as amended, Member States apply the national measures to them for financial years starting on or after 1 January 2027, so their first mandatory sustainability report is due in 2028. The same two-year delay applies to third-wave companies, that is, listed small and medium-sized companies other than micro-undertakings, which will report for 2028 in 2029 instead of for 2026 in 2027.

A provisional trilogue agreement on the CSRD and CSDDD changes followed on 8 December 2025, and the European Parliament approved it on 16 December 2025. The Council adopted the final text of the Omnibus I directive on 24 February 2026. It was published in the Official Journal on 26 February 2026 and entered into force on 18 March 2026.

From the Omnibus I draft to entry into force

Dates set out in this article, from 26 February 2025 to 18 March 2026

1. 26 February 2025 European Commission presented the draft “Omnibus I” package Changes to the CSRD, the CSDDD and the implementing acts under the EU Taxonomy Regulation
2. 14 April 2025 Directive (EU) 2025/794, the “stop-the-clock” directive Postpones the reporting obligations of the second and third waves
3. 8 December 2025 Provisional trilogue agreement On the CSRD and CSDDD changes
4. 16 December 2025 European Parliament approved the agreement
5. 24 February 2026 Council adopted the final text of the Omnibus I directive
6. 26 February 2026 Published in the Official Journal
7. 18 March 2026 Entered into force

| 1,000 employees and EUR 450 million Directive (EU) 2026/470 narrows mandatory sustainability reporting to entities and groups with more than 1,000 employees and net sales revenue above EUR 450 million. |  | Value-chain cap It also caps the information that reporting companies may request from entities in their value chain (the “value-chain cap”). |  | EU digital portal The agreement further provides for an EU digital portal with uniform templates and guidance on reporting requirements at EU and Member State level, which could make the system more transparent and make compliance easier. |
| --- | --- | --- | --- | --- |

This table shows how the scope and timeline of sustainability reporting obligations in the European Union have changed.

| Group of entities | CSRD | Stop-the-clock | Omnibus I |
| --- | --- | --- | --- |
| Large public-interest entities | CSRDReport for 2024 (published in 2025) | Stop-the-clockReport for 2024 (published in 2025) | Omnibus IMember States may exempt entities with fewer than 1,000 employees or turnover below EUR 450 million from reporting for 2025 and 2026 |
| Other large entities | CSRDReport for 2025 (published in 2026) | Stop-the-clockReport for 2027 (published in 2028) | Omnibus IOnly entities with more than 1,000 employees and turnover above EUR 450 million are subject to reporting |
| Small and medium-sized companies listed on a regulated market | CSRDReport for 2026 (published in 2027) | Stop-the-clockReport for 2028 (published in 2029) | Omnibus IThese companies are excluded from mandatory reporting. |
| Subsidiaries and branches whose parent undertaking is established outside the EEA | CSRDReport for 2028 (published in 2029) | Stop-the-clockReport for 2028 (published in 2029) | Omnibus IOnly entities with more than 1,000 employees and turnover above EUR 450 million are subject to reporting |

The higher thresholds under Omnibus I did not clearly extend to companies from third countries. The scope of the obligations for those entities, set out in Article 40a of Directive 2013/34/EU, remains unchanged at the current stage of the legislative process. A company generating EUR 150 million in net revenue on the EU market is covered from 2029 (for 2028).

That raises questions about the coherence and long-term rationality of the EU’s deregulatory approach.

## The European Sustainability Reporting Standards (ESRS)

The CSRD set up the legal framework for the mandatory application of the European Sustainability Reporting Standards (ESRS), drawn up by EFRAG and adopted by the Commission in Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU as regards sustainability reporting standards. The Regulation was published in the Official Journal on 22 December 2023, corrected by a corrigendum of 19 April 2024 and amended by Delegated Regulation (EU) 2025/1416 of 11 July 2025.

## Structure and scope of the ESRS

The ESRS rest on two cross-cutting standards: ESRS 1 General Requirements and ESRS 2 General Disclosures.

| ESRS 1 General Requirements ESRS 1 sets out the basic reporting principles, including the methodology for the double materiality assessment on which the report is built, as well as the scope of the standards and their relationship to other EU legislation. |  | ESRS 2 General Disclosures ESRS 2 contains disclosures that must be made regardless of the outcome of that assessment: the company’s business model and strategy, governance structure, risk management systems, sustainability policies and procedures, and the process of identifying and managing material impacts, risks and opportunities. |
| --- | --- | --- |

The remaining ESRS are grouped under the three ESG pillars: environmental, social and governance. They allow a systematic identification and assessment of impacts, risks and opportunities (IROs) in each area that the double materiality assessment has shown to be relevant. All topical standards share the same structure, opening with an objective that explains what is to be disclosed and how the information should help readers understand the related impacts, risks and opportunities.

| Strategy Each topical ESRS contains disclosure requirements on strategy, meant to show how the topic has been built into the business model and strategy. They refer directly to ESRS 2, in particular to stakeholders’ interests and views (SBM-2) and to material impacts, risks and opportunities and their interaction with strategy and business model (SBM-3). |  | Impact, risk and opportunity management The next reporting area is impact, risk and opportunity management (IRO management). It covers the processes by which the company identifies impacts, risks and opportunities and assesses their materiality (ESRS 2 IRO-1), and the way it manages material sustainability matters through policies and actions: the policies it has adopted, such as a code of conduct or workforce policies (MDR-P), and the actions and resources it applies (MDR-A). |  | Metrics and targets Every topical standard also includes disclosures on metrics and targets (MDR-M and MDR-T in ESRS 2), which make it possible to assess the company’s progress. Companies must disclose specific targets, quantitative and qualitative indicators and how they change over time, which is key to comparing non-financial data between companies. |
| --- | --- | --- | --- | --- |

| Environmental (E) The environmental pillar (E) has five topical standards, ESRS E1 to E5, covering climate change, pollution, water and marine resources, biodiversity and ecosystems, and resource use and the circular economy. They require disclosures on environmental targets, transition plans, emissions metrics and the company’s impact on the natural environment across the value chain. |  | Social (S) The social pillar (S), ESRS S1 to S4, concentrates on the company’s impact on people: its own workforce, workers in the value chain, affected communities, and consumers and end-users. Companies must disclose, among other things, working conditions, respect for human rights, equality and non-discrimination, occupational health and safety, positive and negative impacts on local communities, and responsibility for products and services. |  | Governance (G) The governance pillar (G) has a single topical standard, ESRS G1 on business conduct, which deals with corporate ethics, anti-corruption, internal control systems, relations with stakeholders, organisational culture and oversight of the sustainability strategy. It stresses the role of administrative, management and supervisory bodies in building ESG matters into decision-making. |
| --- | --- | --- | --- | --- |

## The role of EFRAG in shaping the ESRS

The European Financial Reporting Advisory Group (EFRAG) played a key role in shaping the ESRS. It is an independent private association acting in the public interest and bringing together organisations representing European stakeholders, national expert bodies and civil society. Its work initially focused on financial reporting, where it represents the European perspective in the development of IFRS. With the adoption of the CSRD in 2022, the Commission entrusted it with drawing up the ESRS, and EFRAG added a sustainability reporting pillar alongside the financial one. It also worked with the ISSB to make the ESRS compatible with IFRS S1 and S2. Reconciling the EU’s double materiality approach with international standards built on financial materiality produced an interoperability framework that limits duplicated disclosures and improves comparability, while preserving the distinctiveness of each approach.

## Key takeaway

Thanks to the double materiality principle, the EU’s ESRS regime remains the most comprehensive and rigorous sustainability reporting system in the world. Omnibus I raised the scope thresholds and introduced protective clauses for the supply chain (the value-chain cap), but the largest companies and the businesses in their value chains will still have to meet high quality requirements, audited at the limited assurance level. In the next article we look at how the competing idea of a global baseline, developed by the ISSB, compares with the European approach.

![Professional headshot of Nina Szadurska, ESG expert, wearing a pinstriped blazer and a pearl necklace](https://esgdo.com/images/blog/Nina_Szadurska.jpg)

ESG expert

Nina Szadurska

Lawyer, sustainability manager and mediator based in Warsaw. She currently works as a sustainability manager in the FMCG sector. Previously she was an ESG specialist and an ESG consultant. Her areas of expertise include ESG strategy, ESG reporting, double materiality analysis, and managing social and environmental risks in the supply chain. She is a graduate in law and management from the University of Warsaw and undertook part of her academic programme in business at Université Paris Dauphine – PSL.

- Last updated on 29 October 2026.

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