New CSRD Directive: What It Is and What Changes After the Omnibus Directive
The revised Corporate Sustainability Reporting Directive (CSRD) has significantly reduced the number of companies subject to mandatory sustainability reporting. From the 2027 financial year, some companies previously included in the second CSRD reporting wave will need to start reporting again if they fall within the revised scope.
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KEY POINTS
Following the Omnibus reform, the CSRD applies to a significantly smaller group of companies, based on revised employee and turnover thresholds.
The market continues to request structured ESG information, particularly from banks, investors and large customers.
Companies that were already part of the first CSRD reporting wave have continued to report, although the revised scope may affect some of them in the future.
What is the CSRD directive?
The Corporate Sustainability Reporting Directive (CSRD – Directive (EU) 2022/2464) is the European Union’s main legislation governing corporate sustainability reporting.
Its main objective is to improve the transparency, consistency and comparability of companies’ environmental, social and governance information — commonly referred to as ESG information. To do so, it has introduced the obligation for companies to publish sustainability reporting.
In its initial version, the Corporate Sustainability Reporting Directive (CSRD) applied to approximately 50,000 companies. However, with the simplifications introduced by the Omnibus Package—approved by the European Parliament on December 16, 2025—the scope of the new, reformed CSRD has been reduced by more than 90%.
New CSRD Directive: Who Does It Apply To (Post-Omnibus)?
As part of the Omnibus I Simplification Package, a political agreement has been reached that drastically reduces the directive’s initial scope of application. The new CSRD will apply to:
- EU companies with more than 1,000 employees and annual net revenue of 450 million;
- Non-EU companies with at least 450 million in revenue in the EU, and their subsidiaries or branches with revenue exceeding 200 million in the EU.
Note: The narrowing of the CSRD’s scope does not mean that the market’s demand for robust ESG data is decreasing—quite the contrary. An increasing number of banks are requiring ESG information from their corporate clients, as mandated by the new European Banking Authority Guidelines effective January 11, 2026. For this reason, having a sustainability report is becoming increasingly strategic—including for accessing more favorable credit terms. To learn more, read the dedicated article explaining why banks are increasingly requesting ESG data from companies.
When does the new CSRD directive take effect?
The first version of the CSRD was published in December 2022, and it was transposed into Italian law by Legislative Decree No. 125 of September 2024.
The new CSRD Directive, updated with the amendments introduced by the Omnibus Package, is expected to be published in the Official Journal of the EU by March 2026. From that date, Member States will have 12 months to transpose the amendments.
Companies subject to the “stop the clock” directive (second and third waves of the CSRD; see the following paragraph) will no longer be required to publish a sustainability report, unless they fall within the new CSRD thresholds (1,000 employees, 450 million). In that case, the sustainability reporting requirement will take effect starting with the 2027 fiscal year, with the first sustainability report to be published in 2028.
The “Stop-the-Clock” Directive
On April 16, 2025, the so-called “stop-the-clock” directive, which is part of the Omnibus I simplification package, was published in the Official Journal of the European Union.
This measure postponed by two years the requirement to prepare sustainability reports for companies that were supposed to begin the sustainability reporting process in 2025 and 2026 (the so-called Wave 2 and 3 of the CSRD).
However, following the approval of the Omnibus I package discussed above, only companies that fall within the new CSRD thresholds will be required to report on sustainability.
Please remember that:
- Companies that were part of Wave 1: large publicly traded companies with more than 500 employees
- Companies that were part of Wave 2: large unlisted companies
- Companies that were part of Wave 3: Listed SMEs
Which companies will be required to report on sustainability starting in 2027?
Starting in fiscal year 2027 (with the sustainability report to be published in 2028), CSRD reporting will apply exclusively to companies that exceed the new size thresholds: more than 1,000 employees and 450 million euros in revenue.
Companies in the former Wave 1 (large publicly traded companies with more than 500 employees) continue to report without interruption: they have never been subject to the “stop-the-clock” provision and continue to comply with current requirements. Starting in 2027, those that do not exceed the new thresholds will be excluded from the mandatory reporting requirements.
A different situation applies to certain companies from the former “Wave 2” (large unlisted companies): these companies had paused their reporting under the “stop-the-clock” provision, but if they exceed 1,000 employees and 450 million in revenue, they fall within the CSRD scope and are required to resume reporting starting with the 2027 fiscal year. For these companies, the time available to organize their ESG data and properly set up the process is limited.
Further Changes to the CSRD Directive
In addition to changes to the scope of application, the Omnibus Simplification has introduced further CSRD changes. The main ones are:
- Companies with fewer than 1,000 employees within the supply chains of large companies subject to the new CSRD thresholds (>,100 employees and >450 million) will be protected from ESG information requests by large companies subject to the CSRD. Specifically, these companies will not be required to provide information beyond what is required by the European voluntary reporting standard, which will be adopted in 2026 and will be based on the VSME standard (the “value chain cap” concept).
- Sector-specific reporting standards will no longer be adopted. Non-binding sector-specific guidelines may be provided to help companies identify the most relevant issues for their sector in the double materiality analysis.
- The effective date for the adoption of the new European standards for sustainability report assurance has been postponed to July 1, 2027
For this reason, even for companies that fall outside the mandatory scope of the CSRD, preparing a voluntary sustainability report remains a strategic choice: it allows them to respond to the requests of banks, clients, and stakeholders, structure ESG data in a consistent manner, and prepare for future regulatory changes.
Where to Publish the Sustainability Report
The sustainability report can no longer be a standalone document, as the GRI standards previously allowed. Under the new CSRD directive, it will be mandatory to include the ESG report within the management report.
In this way, the sustainability report will become an integral part of companies’ financial statements. Through the CSRD directive, the European Union is making it clear that a company’s ESG performance is no less important than its economic performance.
The CSRD directive stipulates that, in addition to statutory financial statements, sustainability reports must also undergo assurance (audit) by an accredited audit firm. This should make ESG data more reliable and comparable, enabling investors to use ESG criteria in their investment decisions.
The Double Materiality Analysis in the CSRD
Materiality analysis is the process of identifying the most significant aspects to include in an ESG report. Materiality is, in fact, synonymous with significance.
The CSRD Directive will require companies to conduct materiality analyses based on new criteria, moving beyond the GRI standards used to date.
Before the CSRD took effect, materiality analysis considered only the impacts that companies had on the outside world. Now, however, a new concept has been introduced: double materiality. This approach adds an important element: companies must now consider not only their impacts on the outside world, but also the impacts of the outside world on the company itself.
Example of dual materiality
Let’s clarify this principle with an example. Take CO2 emissions: these are considered material because they have a direct impact on the outside world. In fact, they cause climate change, which in turn causes harm to people and ecosystems. With dual materiality, another piece of the puzzle is added: What financial impact will carbon emissions have on the company? (For example, when the carbon tax goes into effect.)
This dual nature of ESG, therefore, prompts companies to view sustainability not as an externality, but as a genuine risk factor for their business.
The Reporting Standards Set Forth by the CSRD: the ESRS
The reporting standards to be adopted for sustainability reports under the CSRD are the ESRS (European Sustainability Reporting Standards).
Developed by EFRAG on behalf of the European Commission, these standards are specifically designed for ESG reporting in the European Union.
As part of the effort to streamline European sustainability regulations, the ESRS standard is also set to be simplified. The new version was submitted to the European Commission by EFRAG in December 2026; it calls for a 60% reduction in mandatory data points.
How Can We Support You with Sustainability Reporting?
The narrowing of the CSRD’s scope of application does not mean that ESG data has become less important. On the contrary, the market is increasingly demanding environmental, social, and governance information: banks, investors, clients, and partners continue to use ESG data to assess the strength, reliability, and risk of companies.
In this context, we support companies in their sustainability reporting—both mandatory and voluntary—by developing customized approaches based on the characteristics and objectives of each organization. In particular, we assist companies in preparing sustainability reports in accordance with the ESRS for those subject to CSRD requirements, and voluntary sustainability reports based on VSME or GRI for companies seeking to structure their ESG data, respond to market demands, and prepare for future regulatory changes.
