Omnibus adoption: a new era of sustainability reporting in the EU

On February 26, 2026, the Official Journal of the European Union published Directive (EU) 2026/470, which formally enacted the Omnibus simplification package. This landmark legislation, which officially enters into force on March 18, 2026, represents a different approach in Europe’s sustainability agenda. A year after publishing the proposal for the Omnibus changes, the EU has finally made them official. By significantly raising thresholds and narrowing the scope of reporting, the EU has sent a clear message: the focus has shifted from administrative volume to economic competitiveness. At the same time, the EU is moving toward a targeted system that holds only the largest global players to the most rigorous standards.

Key changes concerning CSRD reporting

A major pillar of this reform is the reduction in the scope of undertakings subject to mandatory sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD). The net turnover threshold for large undertakings and groups has been raised to €450,000,000, with a minimum requirement of 1,000 employees. Small and medium-sized enterprises (SMEs) listed on regulated markets have been excluded from the mandatory regime to ensure proportionality. They are advised to report sustainability information under voluntary sustainability standards for SMEs (VSME). The EU Commission will establish a delegated act covering sustainability reporting standards for voluntary use by 19 July 2026. However, they should be based on Commission Recommendation (EU) 2025/1710.

To further streamline the process, the Commission has committed to a substantial reform of the European Sustainability Reporting Standards (ESRS), aiming to remove less critical datapoints, prioritize quantitative data over narrative text, and provide clearer instructions on applying the materiality principle.

To protect smaller players within the supply chain, the new regulations introduce a value-chain cap. Reporting companies are now prohibited from requesting information from partners with fewer than 1,000 employees that exceeds the voluntary sustainability standards for SMEs. Reporting undertakings should be able to rely on a self-declaration issued by undertakings in their value chain for the purpose of determining the size of those undertakings. No further verification by the reporting undertaking should be necessary. However, the reporting undertaking should not rely on a self-declared size that it knows, or can reasonably be expected to know, is manifestly incorrect. Additionally, protected undertakings have a statutory right to refuse excessive data requests, and large companies must actively inform them of this right.

The revised framework significantly streamlines the audit process by removing the future requirement to adopt reasonable assurance standards, which was originally planned for 2028. This decision aims to prevent a substantial increase in compliance costs for undertakings by maintaining the more flexible limited assurance regime as the primary standard for sustainability reports.

Key changes to EU Taxonomy reporting

In line with the structural changes to the sustainability reporting framework, the scope of EU Taxonomy disclosures under Article 8 of Regulation (EU) 2020/852 is automatically adjusted. Because the EU Taxonomy Regulation explicitly cross-references the undertakings subject to the reporting requirements of Directive 2013/34/EU (the Accounting Directive), the decision to increase the thresholds for mandatory sustainability reporting directly impacts EU Taxonomy compliance. Consequently, only the largest undertakings—those meeting the new criteria of more than 1,000 employees and a net turnover exceeding €450,000,000—will remain obligated to disclose the alignment of their activities with the EU Taxonomy. This synchronization ensures that the "Taxonomy-eligible" and "Taxonomy-aligned" KPIs (turnover, CapEx, and OpEx) are only required from entities with the most significant environmental impacts and the administrative capacity to manage such complex data, thereby relieving thousands of mid-sized companies from the burden of green labeling disclosures.

Key changes concerning CSDDD reporting

The Corporate Sustainability Due Diligence Directive (CSDDD) has also seen significant adjustments to enhance competitiveness. The thresholds for its application have been raised to companies with at least 5,000 employees and a net worldwide turnover of €1.5 billion. The due diligence process itself has been refined into a two-step scoping exercise: companies first conduct a high-level exercise to identify general areas of risk based on available information, followed by in-depth assessments only where severe impacts are most likely. To provide businesses with adequate preparation time, the application deadline for these due diligence measures has been postponed to July 26, 2029.

Next steps to ease the reporting

The EU is introducing several practical supports to ease the transition. These include the creation of a dedicated online portal offering templates and guidance, as well as initiatives to harmonize digital data formats. Additionally, Member States may exempt undertakings that were previously obliged to sustainability reporting for financial years 2025 and 2026, and now do not fulfill the new thresholds established by the Omnibus directive. As an example, Poland has already started work on such an exemption (currently passed to the President for signing).

Member States are required to transpose the amendments to the accounting and sustainability reporting framework (CSRD), including the new higher thresholds, into national law by 19 March 2027, while the transposition deadline for the updated corporate sustainability due diligence rules (CSDDD) has been set for 26 July 2028.

Conclusion

The finalization of the Omnibus package proves that the EU has listened to the concerns of the business community. By focusing on the largest companies that drive the vast majority of environmental and social impacts, the EU aims to maintain its leadership in the green transition without sacrificing the viability of its medium-sized enterprises. For businesses, the Omnibus adoption provides the legal certainty needed to plan for the coming years.

Sources:

Directive 2026/470: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=OJ:L_202600470

Commission Recommendation (EU) 2025/1710 of 30 July 2025 on a voluntary sustainability reporting standard for small and medium-sized undertakings: https://eur-lex.europa.eu/eli/reco/2025/1710/oj/eng

Polish Omnibus implementation process (exemption for companies obliged for reporting): https://www.sejm.gov.pl/sejm10.nsf/PrzebiegProc.xsp?id=77789B899C940443C1258DA90050BF0B