Final adoption of Omnibus I Directive simplifying CSRD and CSDDD
Background
The long-awaited directive (EU) 2026/470 – amending the Audit Directive[1], the Accounting Directive[2], the Corporate Sustainability Reporting Directive[3] (CSRD) and the Corporate Sustainability Due Diligence Directive[4] (CSDDD) (the Omnibus I Directive) – has been published in the Official Journal of the European Union (the EU). Forming part of the broader EU agenda to simplify existing legislation and enhance the Union’s competitiveness, this legislative package has been discussed lengthily and finally confirms the narrowed personal scope of CSRD and CSDDD, alongside targeted streamlining across reporting and due diligence regimes.
This publication will focus on the scope of simplification introduced by the Omnibus I Directive for (i) CSRD, and (ii) CSDDD.
- CSRD
The CSRD entered into force on 5 January 2023 with the aim of modernising and strengthening the rules on the social and environmental information that companies must report.
The amendments introduced by the Omnibus I Directive include, inter alia:
- A substantial limitation of the scope of undertakings subject to CSRD by limiting the mandatory reporting to undertakings that, at the balance sheet date, exceed both a net turnover of EUR 450 million and an average of 1,000 employees during the financial year, aligning individual and consolidated reporting thresholds. This new scope applies equally, mutatis mutandis, to issuers under the Transparency Directive[5], to the undertakings subject to the Taxonomy Regulation[6], and to parent undertakings for consolidated reporting;
- The European Commission (EC)’s empowerment to periodically adjust net turnover thresholds to inflation;
- A clarification of the requirement for reporting on key intangible resources, with applicability limited to undertakings above the specified thresholds;
- A restriction of third-country group inclusion to cases where the ultimate parent generates EU net turnover above EUR 450 million for two consecutive years and operating through in-scope EU subsidiaries or branches at the EUR 200 million threshold;
- The introduction of an exemption for certain EU and non-EU financial holding companies from consolidated reporting under specific conditions; which had already been envisaged by the Luxembourg Bill of Law 8370, implementing CSRD;
- The removal of listed small and medium-sized enterprises (SMEs) from mandatory CSRD scope, deletion of the empowerment to adopt SME-specific and sector-specific European Sustainability Reporting Standards (ESRS), and provision for revision and streamlining of the first ESRS set, including prioritisation of quantitative disclosures and enhanced interoperability;
- The introduction of a statutory “value‑chain cap” protecting undertakings with fewer than 1,000 employees in reporting undertakings’ value chains (Protected Undertakings), limiting information requests to what is specified in forthcoming voluntary standards and granting a right to refuse excessive requests. Reporting entities must inform Protected Undertakings when a request exceeds those limits and of their right to decline, and assurance opinions must respect that right. A three‑year transition continues to apply for value‑chain data gaps, with explanations required and a pathway to using direct data or estimates thereafter;
- The authorisation to specific sustainability information where disclosure would be seriously prejudicial to commercial interests, reveal trade secrets, disclose classified information, or where confidentiality is required to safeguard privacy or security, subject to conditions and reassessment at each reporting date. Financial holding companies whose subsidiaries’ business models and operations are independent of one another may opt out of consolidated sustainability reporting, without affecting other in‑scope group entities’ obligations; and
- A re-benchmarking of the application timeline to reflect the narrowed scope, including the possibility for Member States to implement an optional transition exemption for companies that had to start reporting from financial year 2024 (the so-called 'wave one' companies) falling out of scope for 2025 and 2026, which has been foreseen by the latest amendments made to the Bill of Law 8370 on 6 May 2025[7].
- CSDDD
The CSDDD entered into force on 25 July 2024 with the aim of fostering sustainable and responsible corporate behaviour in companies’ operations and across their global value chains.
The amendments introduced by the Omnibus I Directive include, inter alia:
- A substantial narrowing of scope, now limited to very large undertakings: EU companies with more than 5,000 employees and EUR 1.5 billion in net worldwide turnover, and non-EU companies generating more than EUR 1.5 billion in net turnover within the EU in the preceding financial year, with proportionate thresholds for franchise and licence models;
- The repeal of the obligation to adopt and implement corporate climate transition plans, reflecting proportionality considerations;
- A risk-based and proportionate due diligence framework, requiring companies to identify and prioritise adverse impacts across their chains of activities by focusing on high-risk areas, direct business partners, and reasonably available information;
- The removal of harmonised EU civil liability rules, while preserving Member States’ discretion to ensure full compensation under national law and to designate transposing provisions as overriding mandatory rules where appropriate;
- A reduction in administrative penalties, now capped at 3% of a company’s net worldwide turnover;
- A limitation restricting information requests to what is necessary and proportionate, particularly in relation to business partners with fewer than 5,000 employees, and recognising industry initiatives, multi-stakeholder schemes, and digital solutions as legitimate sources of compliance support;
- The deletion of the review clause that had envisaged a possible future extension of due diligence obligations to financial services and investment activities; and
- A one-year postponement of the transposition deadline, coupled with a unified application date for all in-scope companies, allowing additional time for implementation and preparation.
What’s next?
The Omnibus I Directive will enter into force on the twentieth day following its publication in the Official Journal, i.e., 18 March 2026. Member States must transpose the Audit Directive/Accounting Directive/CSRD amendments by 19 March 2027 and the CSDDD amendments by 26 July 2028.
Firms should assess whether existing reporting or due diligence readiness plans remain necessary under the new thresholds, recalibrate group scoping (including for non‑EU parents and financial holdings), and prepare to leverage the forthcoming voluntary SME standards and ESRS revisions to streamline data collection with value‑chain partners.
Our sustainability experts Julie Pelcé and Aurélien Hollard will continue to monitor the progress of the transposition to Luxembourg law and keep you updated with the latest developments. In the meantime, please do not hesitate to contact us if you require our assistance.
[1]Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, as amended.
[2]Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, as amended.
[3]Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting, as amended.
[4]Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence, as amended.
[5]Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, as amended.
[6] Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088
[7] Newsflash | “Stop the Clock” Directive: Luxembourg implementation of CSRD
