The CSRD and the EU Omnibus package: Navigating a shifting sustainability landscape

The EU’s Corporate Sustainability Reporting Directive (CSRD) and the recent Omnibus Package are transforming the way organisations approach sustainability compliance. These changes go beyond regulatory obligations - they influence how businesses measure and manage their environmental impact. Accurate carbon accounting is now essential for meeting disclosure requirements, while a well-defined decarbonisation strategy ensures companies can turn compliance into a catalyst for long-term resilience and growth. In this blog, we explore developments to the CSRD and the EU Omnibus package, and how to prepare effectively. 

What is the Corporate Sustainability Reporting Directive? 

Adopted in 2021, the Corporate Sustainability Reporting Directive (CSRD) is one of the EU’s flagship initiatives aimed at strengthening corporate accountability in the climate transition. This landmark regulation mandates companies to disclose how their operations affect, and are affected by, climate and sustainability challenges. By shifting from voluntary to mandatory reporting, the CSRD sets a new standard for transparency, helping align corporate behaviour with the EU’s broader environmental and social objectives. 

Where did the CSRD come from? 

The European Green Deal, adopted in 2020, is the EU’s comprehensive plan for achieving climate neutrality by 2050 - an ambition that would make Europe the first climate-neutral continent. To reach its 2050 target, the EU has committed to reducing greenhouse gas emissions by 55% by 2030 and has proposed a 90% reduction by 2040, both relative to 1990 levels. These milestones are designed to accelerate the transition to a low-carbon economy, drive innovation, and ensure long-term resilience across sectors. The CSRD plays a critical role in this transformation by mandating transparent, standardised disclosures that hold companies accountable for their environmental and social impacts. 

Who is in the scope of the CSRD? 

The CSRD was originally designed to introduce reporting obligations in four phases over several years. However, the Omnibus package, announced in February 2025, has significantly altered this approach, shifting timelines and thresholds. The Omnibus package aims to reduce administrative burdens and simplify reporting requirements for EU companies, ensuring they remain competitive globally.  

Initially, the CSRD was to be phased in, in four waves: 

• First wave: Companies already subject to the Non-Financial Reporting Directive (NFRD) - large public-interest entities with more than 500 employees - were automatically transitioned to CSRD. These firms have been reporting environmental disclosures since 2018 and must now comply with CSRD climate disclosure requirements. Their first CSRD reports will be published in 2025, covering the financial year 2024.
• Second wave: Large undertakings not previously covered by NFRD were next in scope. Originally, this included companies with over 250 employees and either a €20 million balance sheet or €40 million in net turnover.
• Third wave: Listed companies on EU-regulated markets, including SMEs, were originally part of the third wave.
• Fourth wave: Non-EU companies with significant EU operations were initially required to report from 2028 if they generated more than €150 million in EU turnover. 

What needs to be reported under CSRD? 

The CSRD relies on the European Sustainability Reporting Standards (ESRS) to define what data companies must disclose across the Environmental, Social, and Governance (ESG) categories. All in-scope companies are required to report on two mandatory standards: ESRS 1 – General Requirements and ESRS 2 – General Disclosures. Beyond these, there are ten topical standards: 

• Environmental: ESRS E1 Climate Change, ESRS E2 Pollution, ESRS E3 Water and Marine Resources, ESRS E4 Biodiversity and Ecosystems & ESRS E5 Resource Use and Circular Economy.
• Social: ESRS S1 Own Workforce, ESRS S2 Workers in the Value Chain, ESRS S3 Affected Communities & ESRS S4 Consumers and End Users.
• Governance: ESRS G1 Business Conduct. 

Companies must report on these topical standards only if they are assessed as material under the double materiality principle, meaning they are significant both financially and in terms of environmental or social impact. 

What is double materiality? 

The CSRD, utilising the European Sustainability Reporting Standards, introduces the concept of double materiality, a cornerstone of its reporting framework. This principle requires companies to assess sustainability issues from two distinct perspectives: 

• Financial materiality: How environmental, social, and governance (ESG) factors influence the company’s financial performance. For example, climate risks affecting supply chains or regulatory changes impacting costs.
• Impact materiality: How the company’s activities affect the environment and society, such as greenhouse gas emissions, biodiversity loss, or human rights impacts across the value chain. 

Under CSRD, both dimensions must be considered together. A topic is deemed material if it is significant under either lens or both. 

What are the latest developments with the CSRD? 

On 13th November 2025, after months of negotiations and numerous iterations of proposed changes, the European Parliament voted for the latest version of the Omnibus simplification package, which significantly reduces reporting requirements for companies by requiring that only companies with over 1,750 employees, on average, and a net annual turnover of €450 million report under the CSRD framework. The adoption of the Omnibus simplification package is expected to reduce the number of companies reporting by between 80%-90% whilst still ensuring that the largest companies disclose their activities. 

However, although SMEs will technically no longer be in scope of CSRD requirements due to the changes outlined in the Omnibus package, voluntary standards will be available for these smaller firms who still wish to report. 

Six steps companies can take to prepare for CSRD  

Complying with the CSRD is more than a regulatory requirement; it’s an opportunity to strengthen transparency and build trust with stakeholders. However, the process can feel overwhelming without a clear roadmap. To help companies navigate this transition, we’ve broken down the journey into practical steps that move you from understanding the rules to embedding sustainability reporting into your corporate strategy. By following these steps, businesses can not only meet compliance deadlines but also create disclosures that drive long-term value and confidence among investors and stakeholders. 

1. Confirm scope and timeline: Start by determining whether your company falls under CSRD requirements and identify when your reporting obligations begin. These actions are the foundation for planning.
2. Understand the requirements: Familiarise yourself with the European Sustainability Reporting Standards (ESRS), including mandatory disclosures and any topical standards that may apply. Knowing what to report is critical.
3. Conduct a double materiality assessment: Assess both dimensions of materiality:

• Impact materiality – How your operations affect the environment and society.
• Financial materiality – How sustainability issues could influence your company’s financial performance. 

These steps will help you identify which topical standards are relevant.

4. Build internal capability and governance: Educate teams and establish clear roles for sustainability reporting. Ensure leadership buy-in and integrate CSRD into your broader corporate governance framework.
5. Begin data collection and system setup: Once requirements are clear, start gathering the necessary data internally. Implement processes and tools to ensure accuracy and consistency for your annual or sustainability report.
6. Integrate reporting into strategy: CSRD is not a one-off compliance exercise. Embed sustainability reporting into your corporate strategy and disclosures to provide transparency and build trust with investors and stakeholders. Aim for continuous improvement year over year. 

What is the future of the CSRD?  

Negotiations of the text of the finalised Omnibus simplification package are currently still ongoing and are being drafted, with legislation expected to be finalised by the end of 2025.  

However, we must caveat that, due to these proposals still being under review, they may be subject to further amendments before formal implementation. The information used in this blog was up to date at the time of writing.