The Directive amending the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) was published in the Official Journal of the EU on 26 February 2026. Notably, the Directive was published exactly a year on from the European Commission's publication of Omnibus I, its first package of simplification proposals. It is a remarkably swift turnaround - the EU legislative process typically takes at least 18 months to traverse.
The process was not without its controversies (see here) and the reverberations will echo within the EU political establishment long after the Directive has been transposed into national legal regimes.
The Directive enters into force on 18 March 2026. Member States will then have until 19 March 2027 to transpose the provisions relating to CSRD. The new transposition deadline for CSDDD is 26 July 2028.
As a reminder, the key changes are set out below.
CSRD
- Narrowed scope: EU companies and issuers with more than 1,000 employees and a net turnover exceeding €450m must report on and from their 2027 financial year. From the 2028 financial year, non-EU companies must report only if they generate a net EU turnover in excess of €450m for each of the last two financial years and have an EU subsidiary or branch with more than €200m net turnover in the preceding year.
- Transition exemption: Wave 1 companies that began reporting on their 2024 financial years, but that will be outside the scope of the new thresholds, may be exempted from reporting on their 2025 and 2026 financial years. It is up to each Member State to decide whether to implement this exemption. What Ireland will do remains to be seen, but these companies must continue to comply with their reporting obligations in the meantime.
- Value chain information sharing: Companies with fewer than 1,000 employees will have the right to refuse to share information if the request goes beyond what is set out in the voluntary sustainability reporting standards.
CSDDD
- Narrowed scope: Only EU companies with more than 5,000 employees and net turnover in excess of €1.5bn are in scope under CSDDD as amended. Non-EU companies are in scope where they have net EU turnover exceeding €1.5bn. The franchise and licensing thresholds have also been raised.
- Transposition delayed by two years: Member States have until 26 July 2028 to implement CSDDD into their national legal frameworks. The first companies must comply with the new measures from 26 July 2029.
- Due diligence simplified: Companies will be expected to focus on the adverse impacts that are most likely to occur and to prioritise those involving their direct business partners.
- Climate transition plan: The obligation on large companies to adopt a climate transition plan has been removed.
- Civil liability and lower penalties: The plan for a harmonised EU civil liability regime has been scrapped. National civil liability regimes will apply and Member States will be responsible for imposing penalties. Penalties have been set at a maximum of 3% of a company's net worldwide turnover.
Simplification agenda continues
The European Commission published 10 omnibus packages in 2025 as part of its simplification agenda, and this is set to continue in 2026. While the position on CSRD and CSDDD is now settled, corporates must remain agile in the coming months.
For further information in relation to these topics, please contact Anne O'Neill (author), Practice Development Lawyer, or any member of the ESG & Sustainability Team.
