Simplified, not abandoned: EU Corporate Sustainability after the Omnibus I Package
6 min read
The EU's corporate sustainability framework has been reset. On 24 February 2026, the EU formally adopted the Omnibus I package, which is a wide-ranging simplification initiative that amends two landmark directives, which together form the backbone of EU sustainability regulation.
The first, the Corporate Sustainability Reporting Directive ("CSRD"), requires large companies to report publicly on their environmental, social and governance performance against a standardised set of EU reporting standards. The second, the Corporate Sustainability Due Diligence Directive ("CSDDD"), goes further: it requires companies to identify, assess and address actual and potential human rights and environmental harms across their operations and supply chains – and provides for liability where they fail to do so.
Omnibus I raises the thresholds for both directives, extends the timelines, and simplifies a number of the underlying obligations. The result is a significantly narrower mandatory scope but not a fundamental change in direction.
This alert sets out who is now in scope, what the revised obligations look like, and what it means in practice.
Background
Omnibus I – the Commission's sustainability omnibus – was proposed on 26 February 2025 simplifying rules on reporting, sustainability due diligence and taxonomy.1
The process proceeded in two stages. The Stop-the-Clock Directive 2025/794, published in the Official Journal on 16 April 2025,2 postponed by two years the entry into application of CSRD requirements for large companies not yet reporting and listed SMEs, and by one year the transposition deadline and first phase of application of CSDDD.
The substantive amendments then followed through the full legislative procedure and were published in the EU Official Journal after having been adopted on 24 February 2026.3 Omnibus I is not a standalone exercise. In 2025 alone, the Commission proposed ten omnibus packages, aimed at simplifying EU legislation.
The CSRD post-Omnibus
The CSRD requires large companies to report publicly on their environmental, social and governance impacts and risks by using a standardised set of reporting standards and subject to independent assurance. The CSRD's key provisions post-Omnibus are summarized in the table below:
Who is in scope?
- EU undertakings with more than 1,000 average employees and net turnover exceeding EUR 450 million. EU parent undertakings of groups meeting the same thresholds on a consolidated basis are also in scope.
- Non-EU ultimate parent companies with more than EUR 450 million net turnover in the EU (individually or on a consolidated basis) and with an EU subsidiary or branch generating a turnover exceeding EUR 200 million.
What must they do?
- Report on sustainability matters in the management report, applying double materiality (both impacts on people and planet, and sustainability risks to the business).
- Comply with the EU Sustainability Reporting Standards (ESRS).
- Obtain a limited assurance opinion on the sustainability report.
- Value chain data requests are subject to a statutory cap and business partners with up to 1,000 employees may refuse requests that go beyond the Commission's voluntary reporting standards.
By when?
- Member States must transpose by 19 March 2027.
- Mandatory reporting applies for financial years starting on or after 1 January 2027.
- Wave 1 reporters (largest companies already reporting) continue under the existing framework for financial years 2024–2026. Member States may exempt companies below the new thresholds for financial years beginning as early as 1 January 2025 – but this is permissive, not mandatory. The position varies by jurisdiction.
The CSDDD post-Omnibus
The CSDDD goes further than the CSRD, requiring companies not just to report but to act: to identify, assess and address actual and potential human rights and environmental harms across their operations and supply chains.
Who is in scope?
- EU companies with more than 5,000 average employees and more than EUR 1.5 billion net worldwide turnover. EU ultimate parent companies of groups meeting the same thresholds on a consolidated basis are also in scope.
- Non-EU companies generating more than EUR 1.5 billion net turnover in the EU. Non-EU ultimate parent companies of groups meeting the same thresholds on a consolidated basis are also in scope.
- Franchising/licensing models: royalties exceeding EUR 75 million and turnover exceeding EUR 275 million.
What must they do?
- Conduct risk-based human rights and environmental due diligence across own operations, subsidiaries and business partners in the chain of activities.
- Follow a two-stage methodology: scoping exercise first (using reasonably available information to identify highest-risk areas), then in-depth assessment of those areas.
- Establish a complaints and notification mechanism.
- Monitor effectiveness of due diligence measures at least every 5 years, or on any significant change.
- Publicly communicate on due diligence annually.
- Civil liability is governed by national law – where established, full compensation must be available to victims.
- Maximum administrative penalty: 3% of net worldwide turnover.
By when?
- Member States must transpose by 26 July 2028.
- Obligations apply from 26 July 2029.
- Sustainability reporting by publishing an annual statement on the company's website applies for financial years starting on or after 1 January 2030.
- Commission guidelines due by 26 July 2027, which is two years before the application date.
Key takeaways
Omnibus I increases the thresholds for both directives, lengthens the timelines, and streamlines several of the core requirements. This leads to a significantly limited mandatory scope, though the overall direction remains unchanged.
With the EU legislative process now finished, the focus once again shifts to Member State legislatures for the transposition of the EU directives and to strategic compliance management by captured companies.
Until transposition is complete, some uncertainty remains for in-scope companies, especially regarding aspects not covered by maximum harmonization.
The Omnibus I Package revisions sit within a broader program of supply chain regulations:
- In particular, the EU Forced Labour Regulation ("EUFLR"), EU Deforestation Regulation ("EUDR"), the EU Conflict Minerals Regulation ("EUCMR") and EU Batteries Regulation ("EUBR") all complement the CSDDD and CSRD:
- For a practical guide to how the CSDDD, EUFLR, EUDR, EUCMR and EUBR may apply to your business and supply chain, see the EU Supply Chain Navigator | White & Case LLP
- Furthermore, EU product regulation (notably the EU Ecodesign for Sustainable Products Regulation, "ESPR"4) and various carbon pricing developments also impact global supply chains.5 In parallel, the European Commission is driving a more assertive industrial policy that emphasizes manufacturing low-carbon and EU-made components,6 which further impacts companies' supply chains.
For businesses navigating this landscape, the key challenge is not tracking any single instrument in isolation but understanding how the obligations interact, particularly across supply chains. The regulatory environment has not simplified in any absolute sense – it has been recalibrated. Thresholds have risen and timelines have extended, but the underlying obligations are crystallizing rather than retreating.
The Omnibus I Package was the first of several proposed Omnibus revisions to a broad range of EU legislation. These revisions are progressing at different speeds through the legislative process, and 2026 will likely see further consolidation of changes to EU sustainability legislation to align with the EU's goals of increased competitiveness and strategic autonomy.
1 EU Omnibus Package: 10 things you should know about the proposed changes to key sustainability legislation | White & Case LLP.
2 Directive (EU) 2025/794 of the European Parliament and of the Council of 14 April 2025 amending Directives (EU) 2022/2464 and (EU) 2024/1760 as regards the dates from which Member States are to apply certain corporate sustainability reporting and due diligence requirements, available here.
3 Directive (EU) 2026/470 of the European Parliament and of the Council of 24 February 2026 amending Directives 2006/43/EC, 2013/34/EU, (EU) 2022/2464 and (EU) 2024/1760 as regards certain corporate sustainability reporting requirements and certain corporate sustainability due diligence requirements, available here.
4 See our client alert "Eight key aspects to know about the EU Ecodesign for Sustainable Products Regulation" available here.
5 We note, in this respect, that the EU Carbon Border Adjustment Mechanism entered its definitive period on 1 January 2026.
6 The European Commission has notably released a proposal for an Industrial Accelerator Act on 4 March 2026.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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