EU finalizes Omnibus Directive raising sustainability reporting thresholds sharply

On February 24, 2026, the Council of the European Union finalized the Omnibus Directive amending the CSRD and CSDDD, limiting mandatory sustainability reporting to firms with net turnover above EUR 450 million and over 1,000 employees. The narrower scope exempts thousands of mid-sized EU companies and reshapes the data pool Indian exporters must navigate.

The Omnibus Directive, finalized February 24, 2026, amends the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), responding to the European Commission's 2025 commitment to cut administrative and reporting burden by 25%. It raises mandatory-disclosure thresholds to undertakings with net turnover exceeding EUR 450,000,000 and more than 1,000 average employees, exempting thousands of mid-sized firms. It also postpones the deadline for adopting limited-assurance standards to July 1, 2027.

Large EU undertakings above the new thresholds remain in scope, while mid-sized European companies and SMEs are effectively exempted from mandatory reporting. Third-country auditors gain a simplified registration process and temporary oversight exemption, a "transitional bridge" letting global entities trading on EU markets maintain compliance without disproportionate immediate costs. Audit firms carrying out sustainability assurance must now designate at least one "key sustainability partner" meeting specific professional requirements and approved as a statutory auditor in their Member State.

Affected entities should track the July 1, 2027 limited-assurance-standards deadline and the new turnover and employee thresholds determining reporting obligations. Audit firms must appoint key sustainability partners, and third-country auditors should use the transitional registration bridge. Indian exporters and multinationals trading on EU markets should monitor whether they remain in scope and prepare for a more concentrated but higher-quality data pool. Financial institutions should reassess portfolio risk frameworks against the narrowed disclosure universe.

Key figure — Reporting threshold: Net turnover above EUR 450 million and over 1,000 employees