What the new CSRD Omnibus update means for businesses

As of February 2025 the European Commission introduced the “CSRD Omnibus,” an update to the Corporate Sustainability Reporting Directive (CSRD). This proposed update aims to simplify sustainability disclosures by reducing which businesses must report and easing their compliance burden. Although it still requires formal approval, the Omnibus signals a significant recalibration of CSRD obligations.

Below, we’ve kept our original guide on CSRD intact but woven in the latest Omnibus changes where relevant so you can see how they may affect your compliance strategy.

What Is CSRD?

The Corporate Sustainability Reporting Directive (CSRD) is an EU regulation designed to enhance transparency in corporate sustainability reporting. It replaces the Non-Financial Reporting Directive (NFRD) and requires companies to disclose their environmental, social, and governance (ESG) performance in a standardised, comparable manner. The directive is closely tied to the EU Green Deal, pushing businesses across Europe towards more sustainable practices and consistent reporting.

What’s changed under the CSRD Omnibus:

• The original CSRD thresholds have been updated. Instead of catching almost every large firm with at least 250 employees, the Omnibus significantly narrows the scope to companies with 1,000+ employees and €50 million+ turnover.
• Listed SMEs are now out of scope and no longer face mandatory reporting.

These changes aim to reduce compliance burdens while still advancing the EU’s sustainability agenda.

Who Does CSRD Apply To, and How To Tell If You Need To Comply?

Original CSRD Criteria (Pre-Omnibus)

If a company met two out of three of these criteria, it had to comply:

1. More than 250 employees
2. Annual turnover exceeding €50 million
3. Total assets over €25 million

CSRD Omnibus Changes

Under the new proposal, only companies with 1,000+ employees and €50 million+ turnover must report. This is an 80% reduction in mandatory coverage. If you no longer meet these new thresholds, you fall out of scope. However, note that the Omnibus has not yet received final approval.

Below is a quick summary of how these adjustments affect different business sizes:

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Does CSRD Apply to SMEs?

Original Scope

Listed SMEs were previously within CSRD’s scope, with simplified reporting standards. Non-listed SMEs were exempt but could be indirectly affected if they operated within the supply chains of larger companies bound by CSRD.

Omnibus Update

Under the Omnibus, all SMEs (listed or not) become out of scope for mandatory reporting. Listed SMEs gain a major reprieve. However, you may still choose to adopt the Voluntary SME (VSME) framework if demonstrating sustainable practices is important for your investors or clients.

SMEs also enjoy:

• Two-year extension for those that would have begun reporting in 2026 or 2027.
• Reduced pressure from larger companies, as supply chain reporting requirements have been scaled back.

Does CSRD Apply to Non-EU Companies?

Yes, it continues to apply if you generate more than €150 million in turnover within the EU and have either:

• A large subsidiary in the EU meeting the original criteria (250 employees, €50M turnover, or €25M assets), or
• A branch generating over €40 million within the EU.

Omnibus Impact:
The Omnibus does not explicitly alter these rules. If your EU operations meet the threshold, you should still prepare for CSRD. The main changes around employee count and turnover primarily affect EU-headquartered firms.

When Does CSRD Come Into Effect?

Original Timeline

• 2025 (FY 2024): Large companies already reporting under NFRD
• 2026 (FY 2025): Large companies newly covered by CSRD
• 2027 (FY 2026): Listed SMEs, small banks, and insurers (with an opt-out until 2028)
• 2029 (FY 2028): Non-EU parent companies meeting EU turnover threshold

Omnibus Update

The new proposal offers an additional two-year delay for companies newly brought into scope. If you were due to start in 2026 or 2027, you can now push it to 2028. This helps businesses adapt to the revised ESRS (European Sustainability Reporting Standards) requirements.

Does CSRD Apply to the UK?

Although the UK is no longer part of the EU, CSRD can still affect UK-based companies if:

1. They have subsidiaries or branches in the EU meeting CSRD thresholds.
2. They supply goods or services to EU-based clients who request ESG data.

UK SDR Alignment:
The UK is developing its own Sustainability Disclosure Requirements (SDR). While the Omnibus doesn’t directly alter UK SDR, it’s wise to stay updated on both regimes if you operate across borders.

Is CSRD Mandatory?

Before the Omnibus

For companies within scope, CSRD was a legal obligation with potential financial penalties, reputational risks, and lost business opportunities if non-compliant.

After the Omnibus

CSRD remains mandatory for large companies with 1,000+ employees and €50 million+ turnover. However, listed SMEs, many mid-sized firms, and smaller businesses are now outside mandatory scope, greatly reducing the overall compliance burden.

Why Is CSRD Important?

Enhanced Accountability
CSRD standardises ESG reporting, making it easier for investors and policymakers to compare sustainability performance.

Support for the EU Green Deal
By 2050, the EU aims for climate neutrality. CSRD pushes businesses to adopt more responsible models, though the Omnibus softens obligations for smaller players.

Better Decision-Making
High-quality ESG data allows companies to identify long-term risks, from climate impacts to regulatory shifts.

Investor Confidence
Transparent sustainability metrics attract sustainable investment funds and can improve market positioning.

What Is “Double Materiality” in CSRD?

CSRD’s “double materiality” requires companies to examine:

1. Financial Materiality: How do sustainability issues affect the company’s financial performance?
2. Impact Materiality: How does the company’s business model affect the environment and society?

Even under the Omnibus, double materiality remains a central principle, but with fewer mandatory data points and greater emphasis on measuring what’s truly financially material.

Does CSRD Require Scope 3 Emissions Reporting?

Yes, but only if Scope 3 is material. This can include:

• Supplier operations
• Product use and disposal
• Business travel
• Waste management

For companies still in scope (i.e., large firms with 1,000+ employees and €50M+ turnover), Scope 3 remains crucial but can be more narrowly defined under the Omnibus if it isn’t materially significant.

What Are the Penalties for Non-Compliance With CSRD?

Penalties vary by EU member state but typically include:

• Financial Fines: Scaled to the severity and duration of non-compliance
• Legal Actions: Regulatory scrutiny and enforcement measures
• Reputational Harm: Losing investor and consumer trust
• Lost Business Opportunities: Difficulty accessing public procurement or sustainable investment capital

The Omnibus doesn’t change penalty structures, but fewer businesses will be subject to them.

How Should Companies Prepare for CSRD Compliance?

1. Conduct a Readiness Assessment
   Check which threshold applies to you. If you’re above 1,000 employees and €50 million turnover, you likely remain in scope.
2. Implement Robust Data Collection
   While the Omnibus reduces some reporting demands, large in-scope companies still need reliable ESG data. This includes Scope 1, 2, and (if material) Scope 3.
3. Develop a Reporting Strategy
   Align with the revised ESRS once it’s out. Focus on double materiality, but expect fewer mandatory metrics and simpler requirements overall.
4. Ensure Governance and Assurance
   Limited assurance stays in place, meaning you should still prepare for third-party reviews of your ESG data.
5. Engage Stakeholders
   Even if you fall out of scope, voluntary ESG disclosure can be a market differentiator, especially if large clients or investors still demand sustainability data.

Leafr Can Help You Prepare for CSRD

At Leafr, we specialise in cutting through complexity so that you can stay on top of sustainability obligations—without over-investing if you’re no longer in scope. Our network of vetted consultants offers:

• Bespoke Talent: Sustainability experts with proven results in your sector
• Efficient Tools: Carbon accounting and ESG platforms tailored to the newly simplified reporting rules
• Hands-On Support: A roadmap for meeting EU standards, focusing on material issues, and navigating any data collection hurdles

Whether you remain under CSRD or you’re assessing a voluntary approach, get in touch to seize the opportunities that smart ESG strategies bring.

Key Takeaways

• Omnibus Overhaul: CSRD now targets fewer companies (1,000+ employees & €50M turnover), drastically reducing the scope.
• SMEs Out: Listed and non-listed SMEs are now exempt from mandatory reporting, though voluntary frameworks can still help them stand out.
• Extended Timelines: Most new in-scope companies have until 2028 to comply, providing breathing room for ESG readiness.
• Simplified ESRS: Expect fewer mandatory data points and clearer materiality guidance, cutting down on compliance complexity.
• Limited Assurance: The move to stricter audits is off the table, saving companies time and money.
• Reporting Still Matters: Even if you’re out of scope, robust ESG data is increasingly a competitive advantage for investors and clients.

CSRD hasn’t disappeared—it’s evolving into a more targeted and less burdensome regime. Keep tracking your sustainability metrics, anticipate client or investor needs, and stay alert for final confirmation of the Omnibus. Being prepared now ensures you won’t be caught off guard when the new rules take effect.

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