EU Omnibus Package 1 Explained: What Changed for CSRD, CSDDD and Sustainability Reporting?

The Omnibus I package was first introduced by the European Commission in February 2025 as part of a broader effort to simplify EU rules and enhance competitiveness.

During negotiations between the Commission, the European Parliament, and the Council, the proposed scope reductions were expanded. With the Council’s final approval on 24 February 2026, the legislative process is complete. The amended legislation will be published in the Official Journal of the European Union and will enter into force 20 days after publication.

The revised framework significantly reduces the number of companies covered by CSRD and CSDDD compared to earlier versions of the legislation. Companies should now reassess whether they remain within scope under the updated thresholds.

EU Omnibus Package 1 is a legislative amendment package introduced by the European Commission as part of its broader simplification agenda aimed at reducing administrative burden and enhancing EU competitiveness.

Rather than introducing an entirely new regulatory framework, the Omnibus Package modifies existing sustainability legislation. It recalibrates how current rules apply in practice, particularly in terms of scope, timing, and reporting intensity.

Importantly, the package does not repeal the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy Regulation, or the Carbon Border Adjustment Mechanism (CBAM). Instead, it adjusts how these frameworks apply to companies operating in and exporting to the European Union.

The Omnibus Package introduces four primary types of changes:

• Raising reporting thresholds
  The employee and revenue criteria determining which companies fall within scope of CSRD and CSDDD have been increased. This reduces the number of companies subject to mandatory reporting and due diligence obligations.
• Delaying implementation timelines
  Certain compliance deadlines, particularly under CSDDD, have been extended. This provides additional preparation time for companies that remain within scope.
• Removing selected obligations
  Specific requirements, such as the mandatory climate transition plan under CSDDD and the EU-wide civil liability regime, have been removed from the final agreement.
• Limiting regulatory spillover to smaller companies
  The package restricts the extent to which large companies can request detailed sustainability information from smaller suppliers. This is intended to reduce indirect reporting pressure on SMEs.

While these adjustments significantly narrow the regulatory scope, the core structure of EU sustainability policy remains in place. The double materiality principle under CSRD continues to apply to companies within scope, and the risk-based due diligence model under CSDDD remains central to the directive’s design.

Revised Scope: 1,000 Employees and €450 Million Revenue

Under the amended directive, CSRD now applies only to companies that meet both of the following criteria:

• More than 1,000 employees
• More than €450 million in annual revenue

The previous 250-employee threshold no longer applies. The additional revenue threshold further narrows the directive’s scope, meaning a substantial share of companies originally covered are no longer required to report under CSRD. Listed SMEs are excluded from mandatory reporting.

Companies exceeding the revised thresholds remain subject to sustainability reporting obligations.

Simplification of ESRS Requirements

The European Sustainability Reporting Standards (ESRS) have been revised to reduce complexity. The number of required data points has been reduced, sector-specific standards have been removed, and limited assurance remains the applicable level of verification.

Importantly, the double materiality principle remains unchanged. Companies within scope must still assess and disclose both the financial effects of sustainability issues and the environmental and social impacts of their operations.

Voluntary Reporting for Companies Outside Scope

The European Commission will introduce a voluntary reporting standard based on the VSME framework developed by EFRAG.

Companies that fall outside the revised CSRD scope may adopt this framework voluntarily, particularly where investor, customer, or procurement requirements necessitate sustainability disclosure.

The amendments to the Corporate Sustainability Due Diligence Directive are more extensive.

Revised Threshold: 5,000 Employees and €1.5 Billion Revenue

CSDDD now applies only to companies meeting both of the following criteria:

• 5,000 or more employees
• €1.5 billion or more in annual revenue

This represents a substantial increase compared to earlier drafts of the directive.

The majority of European companies are no longer subject to mandatory due diligence obligations under CSDDD.

Compliance Deadline: July 2029

The implementation timeline has been extended.

Companies that remain within scope must comply with the directive by July 2029.

Removal of Mandatory Climate Transition Plans

The final agreement removes the requirement for companies to prepare mandatory climate transition plans under CSDDD.

Removal of EU-Wide Civil Liability Regime

The EU-level civil liability framework has been removed from the directive.

Liability conditions will now be defined by national legislation.

Financial penalties under CSDDD are capped at 3% of global annual revenue.

Risk-Based Due Diligence Remains

The directive continues to apply a risk-based approach.

Companies are expected to focus on identifying and addressing the most severe and most likely adverse impacts within their value chains, rather than systematically auditing all tiers.

The Omnibus Package introduces limitations on supply chain information requests.

Companies with fewer than 1,000 employees may decline to provide reporting information beyond what is required under the voluntary VSME standard.

Under CSDDD, companies must primarily rely on reasonably available information rather than systematically requesting detailed disclosures from smaller value chain partners.

These provisions are intended to limit regulatory burden on SMEs.

While the Omnibus Package is primarily associated with revisions to CSRD and CSDDD, it also introduces adjustments to the EU Taxonomy framework and the Carbon Border Adjustment Mechanism (CBAM). These changes aim to streamline reporting processes and reduce administrative complexity, while preserving the core regulatory architecture.

EU Taxonomy

The EU Taxonomy Regulation, which establishes a classification system for environmentally sustainable economic activities, remains structurally intact. The framework continues to define technical screening criteria for activities contributing to environmental objectives, including climate change mitigation and adaptation.

However, several reporting-related adjustments have been introduced.

Simplified Reporting Templates

The Omnibus amendments include the simplification of Taxonomy reporting templates. The objective is to reduce the volume and granularity of mandatory disclosures while maintaining transparency regarding:

• The share of revenue aligned with Taxonomy-eligible activities
• The proportion of capital expenditure (CapEx) linked to sustainable activities
• The proportion of operational expenditure (OpEx) connected to Taxonomy objectives

In addition, certain detailed breakdown requirements have been consolidated, and reporting related to “Do No Significant Harm” (DNSH) criteria has been streamlined to reduce duplication.

Alignment with Revised CSRD Scope

Taxonomy reporting obligations are now aligned with the revised CSRD thresholds.

This means that companies no longer subject to CSRD due to the new 1,000 employee and €450 million revenue thresholds are generally also relieved from mandatory Taxonomy disclosures.

This alignment is intended to ensure consistency across sustainability reporting frameworks and to prevent overlapping compliance obligations.

Voluntary Reporting for Companies Below Thresholds

Companies that fall below the revised revenue or employee thresholds may continue to report voluntarily under the EU Taxonomy framework.

This option may be relevant for organizations seeking to:

• Demonstrate sustainable investment alignment
• Support green financing applications
• Maintain transparency for investors and lenders
• Participate in sustainable procurement markets

The voluntary approach provides flexibility while maintaining access to the Taxonomy’s classification system as a reference for sustainable economic activity.

Importantly, the core structure of the Taxonomy — including its environmental objectives, technical screening criteria, and sustainability definitions — remains unchanged.

Carbon Border Adjustment Mechanism (CBAM)

The Carbon Border Adjustment Mechanism remains operational and continues to apply to imports of specified carbon-intensive goods into the European Union.

CBAM is designed to address carbon leakage risks by applying a carbon pricing mechanism to imported goods in sectors such as:

• Iron and steel
• Aluminum
• Cement
• Fertilizers
• Hydrogen
• Electricity

The Omnibus Package introduces selected adjustments intended to simplify compliance without altering the core carbon pricing mechanism.

Introduction of a De Minimis Threshold

A de minimis threshold has been introduced for small importers. Importers handling limited volumes of CBAM-covered goods annually may fall below reporting or certificate obligations.

This measure aims to reduce administrative requirements for small-scale importers whose overall emissions exposure is limited.

Adjustment of Certificate Management Rules

The mechanism governing CBAM certificate holdings has been modified.

Under previous rules, importers were required to hold certificates corresponding to 80% of embedded emissions during the reporting period. The updated framework reduces this requirement, lowering the threshold for certificate holdings.

This adjustment is intended to ease liquidity and cash flow implications associated with certificate pre-purchasing.

Delegation of Reporting to Third Parties

The revised framework allows authorized declarants to delegate CBAM reporting obligations to third parties, such as consultants or compliance service providers.

This provides flexibility for companies seeking to centralize or outsource compliance functions.

Carbon Pricing Mechanism Remains Unchanged

While administrative elements have been adjusted, the underlying carbon pricing logic of CBAM remains in place.

Importers are still required to:

• Report embedded emissions in covered goods
• Purchase CBAM certificates reflecting EU carbon prices
• Align reporting with EU ETS pricing structures

As a result, carbon cost exposure linked to embedded emissions in imported goods continues to apply where relevant.

Although EU Omnibus Package 1 narrows the scope of companies subject to mandatory sustainability reporting and due diligence, several core principles of the EU sustainability framework remain in place.

For companies that continue to fall within scope of the Corporate Sustainability Reporting Directive (CSRD), the double materiality principle still applies. Organizations must assess and disclose both how sustainability issues affect their financial performance and how their activities impact the environment and society. The Omnibus amendments simplify reporting requirements but do not remove the need for structured materiality assessments and internal governance processes.

Under the Corporate Sustainability Due Diligence Directive (CSDDD), the risk-based approach remains intact. Companies within scope are expected to identify, prioritize, and address the most severe and likely adverse impacts in their value chains. While liability provisions and thresholds have changed, the expectation of structured due diligence processes for large enterprises continues.

Carbon pricing exposure under the Carbon Border Adjustment Mechanism (CBAM) also remains. Importers of covered goods must still report embedded emissions and purchase CBAM certificates aligned with EU carbon prices. Administrative elements have been adjusted, but the underlying carbon pricing logic is unchanged.

Finally, sustainability reporting obligations for large enterprises exceeding the revised thresholds remain operationally significant. Even with reduced data points and simplified templates, companies must maintain systems capable of producing reliable, assurance-ready disclosures.

The impact of the Omnibus amendments differs depending on company size and market exposure.

Large enterprises that exceed the revised thresholds remain subject to CSRD and CSDDD. While certain reporting elements have been simplified, compliance continues to require structured emissions accounting, supply chain engagement, and internal controls.

Mid-sized companies below the new thresholds are no longer legally required to report or conduct due diligence under these directives. However, many operate within supply chains of larger organizations that remain in scope. As a result, sustainability data requests and voluntary disclosures may continue.

Non-EU exporters remain affected by CBAM where covered goods are imported into the EU. Additionally, EU-based customers subject to CSRD may request emissions data from suppliers outside the EU.

From a financial perspective, carbon pricing exposure under EU ETS and CBAM remains relevant for companies sourcing or importing carbon-intensive goods. Reduced reporting scope does not eliminate carbon cost exposure where applicable.

With final legislative approval completed, the amended framework will be published in the Official Journal of the European Union and will enter into force 20 days after publication. Member States will then align national implementation accordingly.

Companies that remain within CSDDD scope must comply by July 2029. Organizations exceeding the revised CSRD thresholds must continue reporting under the updated ESRS requirements.

While the revised framework provides greater clarity on scope and timelines, review clauses allow for future reassessment of certain elements. Companies should therefore reassess their position under the new thresholds and evaluate whether voluntary reporting, supply chain transparency, or carbon pricing exposure remain relevant to their operations.

Although EU Omnibus Package 1 reduces the number of companies subject to mandatory sustainability reporting and due diligence, regulatory and market complexity remains for large enterprises, companies exposed to CBAM carbon pricing, and organizations responding to investor and customer transparency expectations.

Carbmee’s Environmental Intelligence System (EIS™) provides structured environmental data management across operations and supply chains. For companies remaining within CSRD scope, the platform supports automated Scope 1, 2, and 3 accounting aligned with ESRS requirements, enabling consistent and traceable disclosures.

In the context of CBAM and EU ETS exposure, Carbmee supports scenario-based carbon cost forecasting. Companies can model embedded emissions at product or supplier level and assess potential financial implications under different carbon price assumptions.

Through integration with ERP and procurement systems, Carbmee enables supplier-level emissions transparency and product carbon footprint calculations. This supports organizations that must report under CSRD or provide emissions data to customers.

The platform also supports reduction opportunity analysis through hotspot identification and marginal abatement cost modeling, helping companies evaluate decarbonization initiatives in relation to operational and financial considerations.

As sustainability regulation evolves, structured environmental intelligence can help organizations maintain clarity over compliance obligations, carbon exposure, and supply chain emissions data.