Omnibus I explained: what changed for double materiality

The short version

Omnibus I narrows the CSRD to undertakings with more than 1,000 employees and more than €450 million net turnover. Both thresholds are required, cumulatively. Listed SMEs are removed from mandatory scope. Mandatory ESRS datapoints drop from approximately 1,073 to 320 — a 61 per cent reduction — with all voluntary datapoints removed entirely.^[2] Reasonable assurance, previously expected as a future upgrade, has been removed; only limited assurance remains. The sector-specific ESRS mandate has been deleted. But the four-step DMA process, EFRAG IG 1 methodology, and double materiality itself are unchanged.

1. Scope: the 1,000-employee & €450M threshold

The most visible change. Under the original CSRD text, sustainability reporting applied to undertakings meeting two of three tests: more than 250 employees, more than €50 million net turnover, or more than €25 million balance sheet total. Omnibus I replaces that framework with a simpler, higher-threshold test.

In-scope now means more than 1,000 employees on average during the financial year and more than €450 million net annual turnover. Both criteria must be met, cumulatively. The employee count is the binding constraint for most organisations; the turnover threshold removes a smaller group of labour-intensive low-revenue operators and highly profitable low-headcount ones.^[3]

Commission analysis estimates that the revised thresholds exclude approximately 80 per cent of entities from direct CSRD scope — a drop from around 50,000 reporting entities to approximately 10,000. Listed small and medium-sized enterprises, originally captured as “Wave 3”, are now fully excluded from mandatory scope. Financial holding companies are also excluded.

2. Mandatory datapoint volume: a 61 per cent cut

Omnibus I did not amend ESRS directly. That work fell to EFRAG under a mandate the Commission confirmed on 28 March 2025. EFRAG delivered its technical advice on 3 December 2025, built on a public consultation that drew more than 700 responses and two field tests. EFRAG tech advice · 3 Dec 2025

The headline figure: mandatory datapoints reduced from approximately 1,073 to approximately 320 — a 61 per cent cut. All voluntary datapoints were also removed, pushing the total reduction above 70 per cent.^[2] The simplified ESRS introduce fair-presentation framing, top-down materiality mode, enhanced ISSB interoperability, and phased-in relief for Wave 1 reporters.

3. Non-EU undertakings: €450M parent + €200M subsidiary

Third-country groups with significant EU activity were originally captured at €150 million of EU turnover. Omnibus I tripled that to €450 million of EU net turnover for the parent over two consecutive financial years, paired with a requirement that the EU subsidiary or branch generating that revenue have more than €200 million in annual turnover.

This is less a simplification than a recalibration. Non-EU parents with genuine exposure to the EU market — financial services groups, large consumer brands, energy traders — remain captured. Firms with tangential EU revenue largely fall out.^[3]

4. The value chain information cap

Large filers historically used CSRD requirements as the justification for extensive ESG questionnaires to SME suppliers, creating substantial reporting burden well outside the direct CSRD population. Directive (EU) 2026/470 addresses this directly.

The directive introduces a value chain information cap. In-scope undertakings cannot require “protected undertakings” — entities with fewer than 1,000 employees — to disclose sustainability information beyond what is specified in the Voluntary SME Standard. The cap applies only to CSRD reporting requests; other commercial or regulatory information exchanges are unaffected.^[1]

Three supplementary provisions matter:

• Self-declaration reliance. Reporting undertakings can rely on a self-declaration from value-chain partners that they fall under the protected category, unless the declaration is manifestly incorrect.
• Three-year transition. For the first three years of reporting, undertakings unable to obtain all the required information from their value chain may explain the reasons, document their efforts, and describe plans to obtain it. After three years, direct collection or documented estimates are required.
• Void clauses. Contractual provisions that breach the cap may be deemed invalid.

5. The regulatory pathway

Omnibus I arrived through a compressed but deliberate sequence. The five material milestones:

1. 26 February 2025. Commission tabled the Omnibus I simplification package — a “content” proposal amending CSRD and CSDDD, and a separate Stop-the-Clock proposal to postpone reporting deadlines. EFRAG received its simplification mandate on 28 March 2025.
2. 13 November 2025. Quick-Fix Delegated Regulation (EU) 2025/1416 enters into force, extending phase-in provisions for Wave 1 entities reporting on FY2025 and FY2026.
3. 3 December 2025. EFRAG delivers its simplified ESRS technical advice to the Commission — 61 per cent mandatory datapoint reduction, top-down materiality mode, fair presentation framing.
4. 16 December 2025. European Parliament formally adopts the compromise text following political agreement reached on 9 December 2025.
5. 26 February 2026. Directive (EU) 2026/470 published in the Official Journal; entered into force 18 March 2026 (twentieth day after publication). Member States have until 19 March 2027 to transpose.

6. What Omnibus I did not change

Equally important, and often misreported:

• Double materiality is unchanged. The impact/financial dual test set out in ESRS 1 remains the methodological core. EFRAG IG 1 remains the authoritative implementation guidance.
• Limited assurance remains mandatory. Reasonable assurance has been removed. The Commission is required to adopt harmonised limited assurance standards by 1 July 2027.
• Taxonomy Regulation Article 8 reporting continues. Companies in the revised CSRD scope remain subject to it.
• Climate transition plan disclosure under CSRD remains. The CSDDD obligation to adopt a plan has been removed, but where a plan exists, the CSRD disclosure requirement applies.

Two provisions were removed that deserve flagging:

• Sector-specific ESRS. The Commission’s mandate to adopt mandatory sector standards has been deleted. Sector guidance, if published, will be non-binding.
• EU civil liability regime for CSDDD breaches. Civil liability now falls back to national tort regimes. A review clause applies by July 2031.

7. What this means for your next cycle

Three practical responses for organisations currently in a cycle:

1. Re-confirm scope using the dual threshold. The new test requires both >1,000 employees and >€450M turnover. An organisation that started a 2025 cycle may no longer be mandatorily required to complete it. Methodology investment is not lost — the output remains useful for stakeholder engagement and sustainability-linked finance — but the urgency may have shifted.
2. Continue on IG 1 methodology. The simplified ESRS do not replace EFRAG IG 1. Assessments conducted against IG 1 remain compliant. No methodology migration required.
3. Use the Wave 1 Member State option where available. Directive (EU) 2026/470 gives Member States the option to exempt existing Wave 1 filers from reporting for FY2025 and FY2026. If your Member State adopts the option, internal reporting calendars should be recalibrated — but data collection and materiality work should continue for the FY2027 cycle.

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