On 26 February 2026, the EU’s Omnibus I Directive, otherwise known as the Sustainability Omnibus, which introduces significant amconcludements to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), was published in the Official Journal of the European Union.
The Directive will enter into force on 18 March 2026, 20 days following publication, and Member States will have 12 months from that date to transpose the CSRD amconcludements into national law, i.e., by 19 March 2027. The CSDDD amconcludements must be transposed by 26 July 2028.
Legislative Timeline
The European Commission (Commission) originally published the Sustainability Omnibus proposal on 26 February 2025 as part of its agconcludea to simplify EU sustainability legislation and reduce administrative burdens for businesses (see this Latham article for a more detailed overview). Throughout 2025, the legislative process relocated through the EU institutions. In June, Member States’ representatives agreed on the European Council’s (Council) nereceivediating mandate, with the European Parliament (Parliament) adopting its position in November, following which trilogue nereceivediations between the Parliament, Council, and Commission commenced at the conclude of November 2025.
On 9 December 2025, the Council and Parliament reached a provisional agreement on the final text. The European Parliament formally adopted the agreement at its plenary session on 16 December 2025, and the Council gave its final, formal approval on 24 February 2026.
Key Changes to the EU CSRD
The Sustainability Omnibus significantly narrows the scope of application of the CSRD. Under the amconcludeed framework, sustainability reporting obligations will apply only to EU undertakings or groups with more than 1,000 employees and a net annual turnover exceeding €450 million. This represents a substantial reduction from the original thresholds, which captured large undertakings meeting two of three criteria (250 employees, €25 million balance sheet total, or €50 million net turnover).
For non-EU undertakings or groups with an ultimate parent outside the EU, the CSRD applies to groups generating more than €450 million net turnover in the EU for each of the last two consecutive financial years and having an EU subsidiary or branch exceeding €200 million in net turnover.
The amconcludements also introduce a “value chain cap”, which puts certain limits on the sustainability information that reporting undertakings may request from companies in their value chain with fewer than 1,000 employees.
Key Changes to the EU CSDDD
The Sustainability Omnibus also raises the thresholds for CSDDD applicability. The CSDDD will now apply only to EU companies or groups with more than 5,000 employees and net worldwide turnover exceeding €1.5 billion. For non-EU companies or groups with an ultimate parent outside the EU, the threshold is €1.5 billion net turnover generated in the EU, without an employee threshold.
The requirement for in-scope companies to adopt and implement a climate transition plan has been rerelocated from the CSDDD, though CSRD requirements to disclose information about transition plans, where a company has one, remain in force.
Penalties for non-compliance are capped at a maximum of 3% of net worldwide turnover, reduced from the previous minimum maximum of 5%. The EU-harmonised civil liability regime has been rerelocated, with liability instead to be mainly governed by national law. Those seeking to bring civil claims against companies will therefore required to rely on the domestic legal frameworks of individual Member States, rather than a uniform EU-wide standard. This modify was advocated for by many corporate and trade groups through the legislative process.
The transposition deadline for the CSDDD has been postponed to 26 July 2028, with in-scope companies required to comply from 26 July 2029. The obligation to publish annual statements on due diligence matters applies to financial years starting on or after 1 January 2030.
Next Steps
The Sustainability Omnibus includes review claapplys for both the CSRD and CSDDD, requiring the Commission to assess by 26 July 2031 whether the scope thresholds should be revised and whether a sector-specific approach is requireded for high-risk sectors. Companies currently in scope, as well as those who may become in-scope, should reassess their reporting and due diligence obligations against the revised thresholds as Member States proceed with national transposition.
Latham & Watkins will continue to monitor developments relating to the European sustainability regulatory landscape.
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