The EU Council has spoken: Omnibus I is now law
On 24 February 2026, the Council of the European Union gave its final approval to the Omnibus I simplification package. Two days later, on 26 February 2026, Directive (EU) 2026/470 was published in the Official Journal of the European Union. The directive enters into force on 18 March 2026, and Member States have until 19 March 2027 to transpose it into national law.
The numbers are striking. Roughly 90% of companies previously expected to report under the CSRD are now out of scope. The ESRS data points drop from 1,073 to 320, a 70% reduction. And the CSDDD has been scaled back so dramatically that its original ambition is barely recognizable.
For companies navigating sustainability compliance, this is the single most consequential regulatory development since the CSRD was first adopted in 2022. Whether your organization stays in scope or falls out of it, the strategic implications are significant and demand immediate attention.
New CSRD thresholds: who is still in scope?
The revised CSRD applies only to companies meeting both of these criteria:
- More than 1,000 employees, AND
- Net annual turnover above €450 million
This dual threshold replaces the previous framework that captured companies with 250+ employees and €50 million+ in turnover. The result: from an estimated 50,000 companies under the original CSRD to approximately 5,000 under the Omnibus I text.
Third-country companies
For non-EU parent companies, the thresholds are:
- €450 million net turnover for the parent undertaking within the EU
- €200 million generated turnover for the subsidiary or branch
Wave 1 transition exemption
Companies that were already reporting under wave 1 (financial year 2024) but now fall below the new thresholds get a transition exemption for 2025 and 2026. Member States may choose to exempt these companies from reporting obligations during this period. From financial year 2027 onward, the new scope applies uniformly.
This is a critical detail. If your company started CSRD reporting last year and has fewer than 1,000 employees or under €450 million turnover, you may not need to continue. However, this depends on how your Member State implements the transposition. Do not assume the exemption applies automatically.
What this means in practice
| Company profile | Under original CSRD | Under Omnibus I |
|---|---|---|
| 800 employees, €300M turnover | In scope (wave 2) | Out of scope |
| 1,200 employees, €400M turnover | In scope (wave 1/2) | Out of scope (below €450M) |
| 1,500 employees, €600M turnover | In scope | Still in scope |
| 200 employees, €80M turnover, listed | In scope (wave 3) | Out of scope |
ESRS simplification: from 1,073 to 320 data points
The European Sustainability Reporting Standards have been significantly streamlined:
- Data points reduced by 70%: from 1,073 to 320
- Only limited assurance is now mandated. The planned transition to reasonable assurance has been dropped
- Undue cost or effort considerations are now explicitly recognized, giving companies more flexibility in data collection
- Sector-specific standards have been removed entirely; guidance may follow later but is no longer mandatory
- The European Commission must adopt the simplified ESRS delegated act by June 2026
For companies that remain in scope, this is both good and bad news. Good because the reporting burden drops substantially. Bad because the reduced data points mean less granularity, and companies that have already invested in comprehensive data collection infrastructure may find their efforts were front-loaded for requirements that no longer exist.
At Dcycle, we have seen this firsthand with clients who spent months building Scope 3 data pipelines that now cover data points classified as voluntary. Our recommendation: do not dismantle what you have built. The regulatory direction may shift again, and robust ESG data remains valuable for investor relations, supply chain requests, and competitive positioning.
CSDDD: a directive transformed
The changes to the Corporate Sustainability Due Diligence Directive are even more dramatic:
| Aspect | Original CSDDD | After Omnibus I |
|---|---|---|
| Employee threshold | 500 (phase 1), then 250 | 5,000 |
| Turnover threshold | €150M (phase 1), then €40M | €1.5 billion |
| Climate transition plans | Mandatory | Removed |
| Civil liability regime | EU-wide harmonized | Left to national law |
| Penalty cap | Not defined | 3% of global turnover |
| Due diligence scope | Full value chain | Tier 1 suppliers primarily |
| Assessment frequency | Annual | Every 5 years |
| First compliance deadline | July 2027 | July 2029 |
The CSDDD now covers roughly 70% fewer companies than originally planned. The removal of mandatory climate transition plans and the EU-wide liability regime are particularly significant. These were seen as the directive’s enforcement backbone.
Supplier protection clause
A new provision protects smaller companies in supply chains. “Protected undertakings” (companies with fewer than 1,000 employees) may decline due diligence information requests that exceed what the voluntary SME standards (VSME) require. Suppliers with fewer than 5,000 employees should only be contacted as a last resort.
This directly addresses one of the most common concerns we hear from mid-size companies: the fear of being buried in data requests from larger clients. With Dcycle’s automated data collection, companies can efficiently manage the requests that do come through while staying within the boundaries the new regulation sets.
Timeline: what happens next
| Date | Event |
|---|---|
| 24 February 2026 | Council final approval ✓ |
| 26 February 2026 | Publication in the Official Journal as Directive (EU) 2026/470 ✓ |
| 18 March 2026 | Entry into force |
| June 2026 | Commission adopts simplified ESRS delegated act |
| July 2027 | Commission publishes CSDDD guidance |
| 19 March 2027 | Member State transposition deadline |
| 1 January 2027 | New CSRD scope applies (financial years starting on or after) |
| July 2028 | CSDDD transposition deadline |
| July 2029 | First CSDDD compliance phase |
| 2031 | Civil liability review scheduled |
What should your company do now?
If you are now OUT of scope
- Confirm your status: Check both thresholds: 1,000 employees AND €450 million turnover. You need to be below at least one to fall out.
- Watch your Member State: The wave 1 transition exemption is optional for Member States. Monitor your national transposition.
- Do not abandon sustainability data: Investors, banks, and large clients will continue requesting ESG information regardless of legal obligations. The voluntary SME standard (VSME) provides a lighter framework.
- Protect your investment: If you have already built reporting capabilities, maintain them. Regulatory scope historically expands, not contracts, and a review is already scheduled.
If you REMAIN in scope
- Recalibrate your reporting: The shift from 1,073 to 320 data points means your materiality assessment and data collection priorities need updating.
- Review your assurance strategy: With only limited assurance required, you may be able to reduce audit costs.
- Update supplier engagement: The new supplier protection clauses change how you can request data from your value chain.
- Leverage the simplification: Use the reduced burden to improve data quality on the remaining mandatory data points rather than spreading resources thin.
For all companies
Request a demo of Dcycle’s platform to see how our compliance tracking automatically adapts to the new Omnibus I requirements, whether you need to scale down your reporting or optimize what remains mandatory.
The bigger picture
The Omnibus I package is the most significant rollback of EU sustainability regulation since the Green Deal era began. The stated rationale is competitiveness: reducing administrative burden so European companies can compete globally. Critics, including the European Coalition for Corporate Justice, argue that “vital protections have been dismantled.”
The practical reality for most companies is somewhere in between. Reporting obligations are lighter, but stakeholder expectations have not changed. Investors still want climate data. Consumers still care about supply chain ethics. And the regulatory trajectory, while paused, has not reversed. Both CSRD and CSDDD scope reviews are built into the legislation.
Companies that use this simplification as an excuse to stop collecting sustainability data entirely will likely find themselves unprepared when requirements inevitably tighten again. The smarter move is to use this window to build efficient, technology-driven reporting processes, through platforms like Dcycle’s ESG compliance solution, so that compliance becomes a competitive advantage rather than a burden.
The Omnibus I is law. The question is not whether to adapt, but how strategically you do it.
