CSRD & EU Omnibus Simplification update

EU co-legislators struck a provisional Omnibus I agreement to streamline sustainability rules.

For Corporate Sustainability Reporting Directive (CSRD), the deal sets scope at ≥1,000 employees and ≥€450m net turnover, makes sector-specific reporting voluntary, limits what large reporters can demand from small suppliers (sub-1,000 employees may refuse information beyond Voluntary Sustainability Reporting Standard for Non-Listed SMEs [VSME], where requested as part of CSRD reporting), and foresees a digital portal with templates and guidance. For non-EU companies, CSRD would apply at €450m EU turnover. Listed SMEs and financial holding undertakings are excluded from CSRD scope in the political deal. Final endorsement by Parliament and Council is still required; the European Parliament’s Committee on Legal Affairs (JURI) votes on December 11th, with plenary later in December.

For the Corporate Sustainability Due Diligence Directive (CSDDD), only very large companies would be in scope (≥5,000 employees and ≥€1.5bn turnover, including non-EU companies at that EU-turnover level). The package shifts to a risk-based approach to impacts, drops mandatory climate transition plans, removes an EU-wide liability regime (liability remains at the national level), and caps penalties at 3% of global turnover. Combined with the CSRD changes, this frames a markedly narrower regime while keeping a baseline of due diligence and disclosure.

Revised European Sustainability Reporting Standards (ESRS) (simplified): European Financial Reporting Advisory Group (EFRAG) has delivered its technical advice on simplified ESRS and unveiled the ESRS Knowledge Hub (early December). These drafts consolidate guidance and are intended to reduce datapoints and ease double-materiality work; the Commission will prepare a Delegated Act next. Practically, large groups should continue planning against Set-1 ESRS while tracking the simplification text, and SMEs should align with VSME for value-chain requests.

What this means now:

• Many SMEs fall out of mandatory CSRD; expect VSME-based asks from banks/majors instead.
• Large groups (≥1,000/€450m) should continue CSRD readiness, anticipating fewer sector-specific asks and clearer templates once the portal is live.
• Await formal votes and the Commission’s ESRS DA before changing 2026–2027 reporting plans.