The Corporate Sustainability Reporting Directive (CSRD) has been one of the European Union’s most ambitious attempts to reshape sustainability transparency. Designed as the successor to the Non-Financial Reporting Directive (NFRD), CSRD aims to bring ESG reporting onto the same footing as financial reporting—standardized, comparable, and data-driven. At its core, the directive requires companies to disclose detailed environmental, social, and governance information based on the double materiality principle: how sustainability issues impact the company, and how the company impacts the environment and society. These disclosures are structured according to the European Sustainability Reporting Standards (ESRS), enabling consistency across Europe’s corporate landscape.
When first introduced, CSRD was expected to extend mandatory sustainability reporting to nearly 50,000 companies across Europe.
CSRD’s Original Rollout: A Phased Implementation
CSRD was designed to take effect in structured waves:
- Wave 1 (2024–2025): Companies already governed by NFRD. Their first CSRD-aligned reports are due in 2025.
- Wave 2 (2026–2027): Large companies previously outside the NFRD scope. These firms were initially expected to report from 2027.
- Wave 3 (2027–2029): Listed SMEs and smaller regulated entities, with reporting beginning in 2029.
Non-EU (“third country”) companies with significant EU operations would also fall under CSRD if their EU turnover met defined thresholds. This phased model was intended to gradually extend standardized sustainability reporting across the European economy.
2025: The Omnibus I Package and a Major Policy Shift
By 2025, industry feedback, resource constraints, and concerns about competitiveness prompted the European Commission to reassess the scope and pace of CSRD. The Omnibus I Package, approved by the European Parliament in November 2025, introduced substantial revisions that significantly reshape the regulatory landscape.
Key Changes Introduced
- Narrower Scope
- Thresholds for mandatory reporting will increase; only companies with over 1,000 employees and substantial financial criteria (e.g., €450M turnover) will fall under CSRD.
- As a result, up to ~80% of companies initially expected to report may now be excluded, particularly mid-sized enterprises and listed SMEs.
- Delayed Timelines
- A “stop-the-clock” mechanism pushes reporting obligations back by two years for companies originally slated for Waves 2 and 3.
- Wave 1 companies still report in 2025, but with certain simplified requirements.
- Simplified Reporting Requirements
- Revised ESRS standards will reduce the number of mandatory data points.
- Sector-specific standards may be scaled back or made optional.
- Greater emphasis will be placed on clear quantitative disclosures.
- More Flexibility for Non-EU Companies
- Updated thresholds for non-EU entities generating revenue in the EU determine whether they must comply.
- Legislative Uncertainty
- Despite Parliamentary approval, Omnibus amendments must still pass Council negotiations before being transposed into national law.
What This Means for Companies and Stakeholders
- Reduced compliance burden: fewer mandatory disclosures and fewer companies in scope.
- More time: delayed deadlines give businesses extra runway to prepare data systems and reporting processes.
- Voluntary pathways: SMEs can adopt simplified or voluntary standards (such as upcoming SME-focused ESRS) to satisfy customer or investor expectations without full regulatory pressure.
Global Relevance: Why CSRD Still Matters Beyond the EU
Even with the changes, CSRD remains one of the most far-reaching ESG reporting frameworks globally. Its influence extends beyond European borders because:
- Global supply chains feed into EU markets—EU buyers may demand CSRD-aligned data from suppliers regardless of location
- Third-country companies with EU turnover may still fall under CSRD, depending on thresholds
- Double materiality remains central, encouraging companies to integrate sustainability impacts into strategic decision-making
- ESRS creates a common ESG language, shaping global reporting norms and investor expectations
For professionals in sustainability reporting, product stewardship, LCA, EHS, and compliance, CSRD remains a critical framework to watch—even if your company is outside the EU.
What to Watch in the Coming Months
- Adoption of revised thresholds and simplification measures in EU legislative negotiations
- Progress on voluntary SME reporting standards led by EFRAG
- Proliferation of ESG data management tools, software platforms, and audit solutions
- Broader policy alignment between CSRD, CSDDD, the EU Taxonomy, and related sustainability laws
Way Forward
Regardless of whether a company remains in scope, several practical steps can build resilience and competitive advantage:
- Assess readiness and applicability under both current and potential future rules
- Invest in ESG data infrastructure (emissions, resource use, workforce metrics, governance data, etc.)
- Leverage existing compliance capabilities, such as SDS, LCA, EHS, and reporting expertise, to strengthen sustainability programs
- Monitor regulatory development for final thresholds. Reporting requirements can also continue to evolve
- Consider voluntary disclosures, especially if customers, investors, or supply-chain partners expect ESG transparency
Conclusion
CSRD’s original vision was transformative: create a unified sustainability reporting framework that could reshape transparency and accountability worldwide. The 2025 Omnibus reforms recalibrate this ambition, reducing burdens and adjusting timelines while maintaining the directive’s essential purpose.
For forward-thinking companies, this moment is not a pause but an opportunity. Investing now in reliable ESG systems, transparent reporting practices, and robust data governance will strengthen stakeholder trust, enhance competitiveness, and prepare organizations for a future where sustainability remains a defining force in global markets.
At IDS Infotech, our experts can guide you through the evolving CSRD requirements and help build a reporting framework that is future-proof and audit-ready. Connect with us today.