- The Omnibus I Directive (EU) 2026/470 narrowed direct CSRD reporting to EU companies with more than 1,000 employees and more than €450 million in net turnover.
- Roughly 45,000 companies that spent two years preparing no longer face direct statutory reporting.
- In-scope buyers cannot legally demand sustainability data beyond the Voluntary SME Standard (VSME) from suppliers with 1,000 employees or fewer.
CSRD after Omnibus, defined: The Omnibus I Directive (EU) 2026/470, in force since 18 March 2026, narrowed the Corporate Sustainability Reporting Directive (CSRD) to EU companies with more than 1,000 employees and more than €450 million in net turnover. Companies below both thresholds no longer report directly under CSRD. The number of in-scope companies fell from 50,000 to 5,000.
Key takeaways
- Your direct reporting obligation: companies below both thresholds have no statutory requirement to file CSRD reports.
- The value chain cap : corporate customers cannot legally demand sustainability data beyond the VSME standard from suppliers with 1,000 employees or fewer.
- Commercial differentiation: suppliers who publish VSME data answer customer requests immediately while competitors delay.
- Asset conversion: double materiality assessments and carbon baselines convert into standard procurement packages.
- International reach: the value chain cap protects suppliers across the EU and candidate countries based on headcount.
Direct reporting ends for most suppliers
If your business employs fewer than 1,000 workers or generates under €450 million in net annual turnover, you have no direct CSRD reporting obligations. Both thresholds must be met to enter direct scope. Around 45,000 companies that prepared for statutory reporting no longer face this requirement.
Your company drops out of direct scope, which resolves the statutory obligation.
The commercial consequence matters just as much: the directive that removed your reporting obligation also capped what your largest customers can legally demand . Suppliers who understand this cap and organize their data gain an advantage over competitors who scramble to answer custom questionnaires.
What changed under Omnibus I
The European Commission proposed the Omnibus Simplification Package in February 2025. The European Parliament approved the compromise text on 16 December 2025, and the Council adopted the package on 24 February 2026 . The Omnibus I Directive (EU) 2026/470 was published in the Official Journal on 26 February 2026 and entered into force on 18 March 2026.
This package cuts corporate sustainability reporting scope more than any previous EU reform.
The revised CSRD thresholds
Direct CSRD reporting under the revised framework ( Directive 2022/2464 as amended) applies to EU large undertakings meeting both criteria:
| Criterion | Threshold |
|---|---|
| Employees | More than 1,000 |
| Net annual turnover | More than €450 million |
Both thresholds are cumulative. A company with 1,400 employees and €300 million turnover remains out of scope. A company with 800 employees and €600 million turnover remains out of scope.
| Dimension | Pre-Omnibus (Directive 2022/2464) | Post-Omnibus (Directive 2026/470) |
|---|---|---|
| Employee threshold | > 250 | > 1,000 |
| Financial threshold | > €40M turnover OR > €20M balance sheet | > €450M net turnover |
| Threshold logic | Employees AND one financial criterion | Employees AND turnover (both required) |
| Listed SMEs | In scope from FY2026 (wave 3) | Removed from scope entirely |
| Companies in scope (est.) | ~50,000 | ~5,000 |
Listed SMEs are excluded. The reform eliminated the third-wave obligation scheduled for listed SMEs in fiscal year 2026.
The transition exemption
Companies subject to the previous thresholds that fall below the revised limits receive a transitional exemption for financial years 2025 and 2026, which member states may apply. Check with your national authority and auditor regarding local implementation.
For financial years beginning on or after 1 January 2027 , the revised thresholds apply across the board without transitional rules.
The value chain cap gives suppliers a commercial advantage
The value chain provision changes supplier obligations across Europe.
Under Omnibus I, entities that remain subject to CSRD cannot legally request sustainability information from business partners with 1,000 employees or fewer that exceeds the Voluntary SME Standard (VSME) established by EFRAG .
For two years, large corporate buyers drove the ESG burden on European SMEs through bespoke questionnaires demanding custom metrics, divergent formats, and tight deadlines.
Omnibus I replaces these requests with a single statutory ceiling tied to a public standard.
Commercial impact
Prior to Omnibus: Corporate buyers requested unstructured ESG datasets without legal limits. Each questionnaire demanded separate team hours.
Following Omnibus: The VSME standard defines the maximum data package any large customer can require. Assembling this data once lets suppliers answer all inquiries from a single record.
Enterprise buyers include sustainability evaluations in tender and procurement reviews. When evaluating competing suppliers:
- The supplier with prepared VSME data responds within 24 hours.
- The supplier unfamiliar with VSME requests a three-week extension.
- The supplier that fails to respond drops out of the process.
Enterprise procurement teams evaluate all three suppliers regardless of direct CSRD scope. Preparation decides the contract award. Managing digital requirements like GDPR compliance and NIS2 cybersecurity standards demands the same operational discipline.
First-mover advantage
Many corporate procurement teams continue to distribute legacy questionnaires because their internal templates have not caught up with the regulation.
This delay gives prepared suppliers an advantage. Responding with a documented VSME report, and noting that it meets the statutory ceiling under Omnibus I, proves regulatory readiness to procurement leads.
The VSME standard structure
The VSME standard contains two practical modules:
| Module | Content | Application |
|---|---|---|
| Basic | Core environmental, social, and governance metrics (energy consumption, greenhouse gas emissions where measured, workforce headcount, business ethics) | Covers most supplier assessments |
| Narrative PAT | Policies, Actions, and Targets (governance and transition measures) | Required by enterprise buyers or within regulated supply chains |
Most SMEs already maintain the underlying records in energy invoices, payroll systems, and governance files. The process consists of organizing existing data into the standard template.
Action plan:
- Document your out-of-scope status in writing for customer queries.
- Compile the VSME Basic module dataset.
- Add the Narrative PAT module if working with regulated enterprise buyers.
- Use the completed report as your standard customer response file.
- Update metrics annually.
Repurpose previous CSRD investments
Organizations that invested in CSRD preparations before the threshold adjustment can apply those assets across daily business operations:
| Asset | Operational Application |
|---|---|
| Double materiality assessment | Populates the VSME package and supports investor due diligence |
| Emissions baseline | Satisfies tender requirements and commercial banking reviews |
| Governance documentation | Meets bank financing covenants and public procurement criteria |
| Policy framework | Converts into the VSME Narrative PAT module with minimal edits |
| Data collection workflow | Provides repeatable infrastructure for annual supplier disclosures |
Update corporate records: Review investor presentations, tender registrations, and website disclosures. Remove claims of mandatory CSRD reporting to keep all legal and commercial documentation accurate.
Changes to the Due Diligence Directive (CSDDD)
The European Union amended the Corporate Sustainability Due Diligence Directive alongside CSRD in the same reform:
| Dimension | Pre-Omnibus (Directive 2024/1760) | Post-Omnibus |
|---|---|---|
| Scope | Phased from > 5,000 employees down to > 1,000 / €450M by 2029 | Restricted to > 5,000 employees AND > €1.5 billion turnover |
| Companies in scope (est.) | ~13,000 | ~6,000 |
| Value chain reach | Comprehensive value chain due diligence | Constrained; value chain cap applies to SME partners |
CSDDD reaches smaller suppliers through customer due diligence audits. The value chain cap limits those requests to the VSME ceiling.
Scope assessment matrix
| Company Profile | Direct CSRD Obligation | Commercial Position |
|---|---|---|
| EU company > 1,000 employees AND > €450M turnover | ✅ Yes | Full CSRD/ESRS reporting; must restrict supplier inquiries to the VSME cap |
| EU company 250 to 1,000 employees | ❌ No | Out of scope. Protected by the VSME cap; differentiated by VSME readiness |
| EU listed SME | ❌ No | Wave 3 statutory obligation removed |
| EU micro / small enterprise | ❌ No | Never in scope; value chain cap applies |
| EEA company (NO / IS / LI) | ⚠️ Conditional | Applies via EEA incorporation; confirm timelines with national financial authorities |
| Non-EU parent with EU presence | ⚠️ Conditional | Third-country regime retained with revised thresholds (verify against final text) |
| Non-EU / accession country supplier | ❌ No | Not in scope; the value chain cap limits data requests from EU buyers |
Suppliers in EU accession countries
Western Balkans, Ukraine, Moldova, Georgia: Candidate countries align environmental and corporate regulations under EU accession Chapters 27 (Environment) and 6 (Company Law).
Status: Candidate countries have not transposed direct CSRD mandates, though several have started voluntary reporting frameworks.
Impact of the March 2026 reform: The value chain cap applies based on headcount rather than where a company is registered. Suppliers in Belgrade, Podgorica, or Kyiv with 1,000 employees or fewer receive the same VSME protection as EU competitors.
Commercial outcome: Publishing a standard VSME package cuts administrative costs for companies selling into the EU single market and prevents unbounded ESG audit requests.
Frequently Asked Questions
Is my company still in scope for CSRD after the Omnibus?
What is the CSRD value chain cap and how does it protect SMEs?
My customers still send me long ESG questionnaires. Do I have to complete them?
Is there a commercial benefit to preparing VSME data if I am not required to report?
Do I still have to report for financial year 2025 if I was in scope under the old rules?
Does the value chain cap apply to suppliers outside the EU?
This article is for informational purposes only and does not constitute legal advice. For advice specific to your situation, consult a qualified legal professional.
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