CSRD: what it is, who it applies to and how the Omnibus changes it

The Corporate Sustainability Reporting Directive (CSRD) is the European directive that requires large companies to publish comparable, reliable and assured sustainability information, integrated into the management report and prepared in line with the ESRS standards. In 2026, both its scope and its timeline changed significantly with the Omnibus package.

Since this article was first published, the framework has evolved: Directive (EU) 2026/470, published in the Official Journal of the EU on 26 February 2026 and in force since 18 March 2026, simplifies the CSRD, raises the application thresholds and postpones the obligation for a large share of companies. Below you will find the key updates, which companies are affected and how to prepare, with a focus on those that will report for the first time on the 2027 financial year.

What is the Corporate Sustainability Reporting Directive?

The CSRD expanded and strengthened the former Non-Financial Reporting Directive (NFRD), which it repealed, with a clear objective: to improve the quality, comparability and reliability of the ESG information that companies disclose. Unlike the previous framework, the CSRD:

• Integrates sustainability into the management report, alongside financial information.
• Introduces external assurance requirements.
• Requires the use of common standards (ESRS).
• Mandates the application of the double materiality principle.

Sustainability therefore stops being a narrative exercise and becomes a structured reporting system, with strategic, financial and operational implications.

Which companies are required to report under the CSRD?

Following the Omnibus Directive, the CSRD concentrates on larger companies. The scope now covers:

• Large companies with more than 1,000 employees and more than €450 million in net turnover. Both criteria must be met at the same time.
• Parent undertakings of groups exceeding those same figures on a consolidated basis.
• Certain non-EU parent companies with significant activity in the European market.

Wave 1 companies that were already reporting and now fall below the new thresholds must keep reporting until financial year 2027, unless their member state exempts them earlier.

This adjustment sharply reduces the number of companies in scope (it leaves out most of those that would have been captured by the original text), but it does not remove the requirement for large organisations.

New application timeline

The Omnibus package, together with the directive known as "stop-the-clock", reordered the timeline:

• Wave 1 companies: already published their first CSRD reports on the 2024 financial year and continue reporting until financial year 2027, unless their member state exempts them.
• Large companies within the new thresholds: will report for the first time on financial years starting on or after 1 January 2027, publishing in 2028.
• Non-EU parent companies: financial years starting on or after 1 January 2028.

Member states have until 19 March 2027 to transpose the changes into national law.

To understand how the directive relates to the standards, the comparison in CSRD and ESRS: differences and similarities is a useful read.

The Omnibus package: what really changes

The European Commission presented the Omnibus package in February 2025 with a clear aim: to simplify the CSRD without hollowing it out. The text was finally adopted as Directive (EU) 2026/470. The most relevant changes are:

1. Higher thresholds and fewer companies in scope

Application is limited to companies with more than 1,000 employees and more than €450 million in turnover, which excludes most of the mid-sized companies that the original text would have brought in.

2. Postponement of the obligation

Companies entering through the new thresholds get more time to prepare, with their first report covering the 2027 financial year. More than a reprieve, this is an opportunity to build robust systems.

3. A lighter reporting burden in the ESRS

The delegated act with the revised ESRS was adopted on 3 July 2026. It cuts more than 60% of the mandatory data points and more than 70% of the total, removes voluntary disclosures and makes the materiality assessment more flexible through a top-down approach. It applies to financial years starting on or after 1 January 2027, with early adoption possible for 2026 financial years. The focus shifts towards information that is genuinely material, verifiable and decision-useful. You can see the detail in our guide to the Omnibus Regulation and in our analysis of the changes to the ESRS.

4. Sector-specific standards postponed

The sector-specific ESRS have been set aside for now, which reinforces the role of double materiality as the primary filter.

5. Taxonomy reporting follows the CSRD scope

The obligation to report alignment with the EU Green Taxonomy is tied to the CSRD scope: companies that fall outside the new thresholds are no longer required to report it, although many keep doing so voluntarily because their banks, clients or investors ask for it. The taxonomy simplification delegated act also introduced a 10% materiality threshold and shorter reporting templates.

6. Level of assurance

Limited assurance is retained and the move to reasonable assurance has been dropped. The harmonised assurance standards are due to be adopted by 1 July 2027.

What information do CSRD sustainability reports require?

The CSRD sets disclosure requirements based on double materiality, which combines financial materiality and impact materiality.

Double materiality remains the central axis

Despite the changes, double materiality remains intact. Companies must analyse and report:

• Financial materiality: how ESG factors affect the company's financial situation, performance and position.
• Impact materiality: how the company's activity affects the environment and people.

This analysis determines which topics are reportable, making double materiality the cornerstone of the entire CSRD.

ESG information requirements

The CSRD requires reporting on environmental, social and governance matters:

• Environmental information: impact on the environment, including greenhouse gas emissions, water and energy consumption, waste management and biodiversity, with particular attention to climate change.
• Social information: impact on people, including human rights, working conditions, health and safety, diversity and inclusion, and relationships with communities.
• Governance information: corporate governance, risk management, business ethics and anti-corruption.

The information must be relevant, complete, accurate and balanced, reflecting both the positive and the negative aspects of performance.

CSRD standards and reference frameworks

The information must be prepared in line with the European Sustainability Reporting Standards (ESRS), developed by EFRAG. These standards provide the guidance needed to apply the directive's requirements with consistency and comparability. Companies can also draw on other recognised frameworks to complement their reporting.

Integration with other frameworks: GRI, SASB and ISSB

The CSRD is compatible with other sustainability frameworks, which avoids duplicating effort:

• GRI: the most widely used standards worldwide, focused on economic, environmental and social impacts.
• SASB: sector-specific standards focused on financially material information, now governed by the ISSB within the IFRS Foundation.
• ISSB (IFRS S1 and S2): the global standards for sustainability- and climate-related financial disclosure. IFRS S2 incorporates the TCFD recommendations; the task force was disbanded in 2023 and monitoring passed to the IFRS Foundation.

The ESRS revision is precisely intended to improve interoperability with the ISSB standards, so that companies with international operations can reuse much of their information.

Assessing risks and opportunities under the CSRD

The CSRD requires companies to identify, assess and manage sustainability risks and opportunities, over both the short and the long term. Risks may be:

• Physical: linked to climate change impacts, such as extreme weather events or resource scarcity.
• Transition: arising from the shift to a low-carbon economy, such as regulatory, technological or demand changes.
• Reputational: associated with negative impacts of the company's activity on society or the environment.

How to identify opportunities

Companies must also spot opportunities to create long-term value, such as developing sustainable products and services, improving operational efficiency (with savings in resources, emissions and waste) or accessing green finance.

How to prepare to comply with the CSRD in 2027

Although the first report may seem distant, the CSRD takes years of preparation. The key steps are:

1. Carry out the double materiality analysis as early as possible.
2. Run a gap analysis against the applicable ESRS.
3. Define an ESG data governance model on a par with financial data.
4. Involve the key functions: finance, legal, HR, procurement and operations.
5. Work with the value chain, especially for Scope 3 data.
6. Rely on ESG technology to automate, validate and audit the information.
7. Prepare for external assurance from the early stages.

Manglai, your ally in CSRD compliance

Manglai is an all-in-one solution for measuring and managing the carbon footprint, which makes it easier to meet the CSRD's reporting requirements. Our features support the calculation of Scope 1, 2 and 3 emissions, data analysis with reduction recommendations, and the generation of auditable reports.

If your company falls within the scope of the directive, our CSRD compliance solution helps you organise the data and turn the obligation into a lever for competitiveness.