On 26 February, the Omnibus I Directive was published in the Official Journal of the EU, two days after the Council of the European Union formally adopted the final text on 24 February 2026.
This legislative package forms a cornerstone of the EU’s "simplification" agenda, significantly narrowing the scope and administrative burden of two major instruments: the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D).
Originally proposed by the Commission on 26 February 2025, the text reached a political agreement in December 2025 following shifts in the parliamentary landscape. This final adoption concludes an accelerated legislative process designed to recalibrate Green Deal ambitions in light of European competitiveness concerns.
In this insight, we summarise the main changes to the CS3D and CSRD and outline the next steps and some strategic outlooks.
I. The Corporate Sustainability Due Diligence Directive (CS3D)
The most drastic revisions appear within the CS3D, where the scope of application has been reduced significantly to target only the largest market players.
The key amendments to the Directive can be summarized as follows:
Scope: The Directive now applies only to EU companies with more than 5,000 employees and a global net turnover exceeding €1.5 billion. For non-EU companies, the threshold is set at €1.5 billion generated within the Union.
Removal of the Climate Transition Plan: In a major shift, the requirement for companies to adopt and implement climate transition plans (aligned with the 1.5°C Paris Agreement goal) has been entirely removed from the CS3D.
A "Scoping" rather than "Mapping" Approach for Due Diligence Obligations: Companies are now required to identify adverse impacts based on "already reasonably available" information. Following the scoping exercise, undertakings must conduct in-depth assessments where the most severe risks have been identified. Data may be requested from business partners only where necessary and, with respect to smaller business partners (under 5,000 employees), as a measure of “last resort”.
Termination / Suspension of Business Relationships: The final text of the Directive eliminates the "last resort" requirement to permanently sever ties with business partners when mitigation fails. Instead, the focus shifts to a more flexible approach: where allowed by the applicable governing law, companies are now expected to suspend specific activities or relationships until the issues are resolved.
Liability and Fines: The proposed EU-wide harmonized civil liability regime has been removed, leaving enforcement to national systems. Furthermore, the ceiling for financial penalties has been lowered to 3% of net worldwide turnover.
Timeline: Following a one-year delay in the transposition deadline to 26 July 2028, full application for in-scope companies will begin on 26 July 2029, with the first official reports expected in January 2030.
II. The Corporate Sustainability Reporting Directive (CSRD)
The Omnibus I package also provides relief for companies navigating the CSRD reporting landscape:
Scope: The CSRD thresholds have been reset to apply only to (i) EU companies with more than 1,000 employees and €450 million in net turnover, and (ii) non-EU parent companies that generate over €450 million within the Union for two consecutive years and maintain a local subsidiary or branch with at least €200 million in annual turnover in the preceding financial year.
Value Chain Protections: To protect smaller entities, a "value chain cap" has been introduced. "Protected undertakings" (with fewer than 1,000 employees) may decline to provide data that exceeds voluntary reporting standards.
Removal of Sector-Specific Standards: The Commission’s mandate to adopt mandatory sector-specific standards has been replaced by a mandate to provide non-binding guidance, which will be developed based on industry demand.
Exemptions: New reliefs are now available for financial holding undertakings and large subsidiaries with listed securities, provided certain conditions regarding independent business models are met.
Phased Reporting Schedule: Most EU-based entities falling within the revised scope must begin reporting in 2028 (covering the 2027 financial year), while non-EU parent organizations are granted an additional year, with their first disclosures due in 2029 (covering the 2028 financial year).
III. Next Steps and Strategic Outlook
The Omnibus I Directive will enter into force on 18 March 2026, triggering the 12-month period for Member States to transpose the relevant amendments to the CSRD. As regards the provisions related to the CS3D, Member States must complete the necessary adjustments to their ongoing transposition by 26 July 2028.
The Omnibus I package offers a substantial reduction in both the number of companies in scope and the weight of their obligations. While it has been largely welcomed by the business community as an important step to protect competitiveness, the reforms have also faced some criticism. Members of civil society and NGOs have warned of potential setbacks for human rights and environmental protections, while certain investors and the European Central Bank have raised concerns about possible effects of weakened disclosure obligations on market transparency and sustainable investment.
Despite these legislative simplifications, significant considerations remain. The removal of an EU-wide liability regime may result in differences in enforcement across Member States, and reputational and litigation risks continue to exist. Companies that adjust their due diligence practices should remain attentive to national requirements and stakeholder expectations. The extended lead time offers undertakings an opportunity to organise operations, refine internal data-gathering processes, and assess whether they qualify for the newly introduced exemptions.
