EU Omnibus I: CSRD and CS3D amendments finalised: what do you need to know?

The European Parliament and Council have formally approved the provisional political agreement that was reached on 9 December 2025 on the changes to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D or CSDDD) under the Omnibus I package. 

The approved text is available here.

This will now need to be published in the Official Journal of the EU and will enter into force on the 20^th day after publication.

In this blog post, we summarise the main changes to those regimes.

CSRD

Scope

• The CSRD is now only applicable to:

• Undertakings which are already reporting under the CSRD regime (“wave one” undertakings) which would fall out of scope on the basis of these revised tests will need to continue reporting until the financial year starting on or after 1 January 2027 unless the relevant Member State opts to exempt them.

Financial holding undertaking exemption

• The CSRD amendments introduce an exemption for “financial holding undertakings” whose sole object is to acquire holdings in other undertakings and to manage such holdings and turn them to profit, without involving themselves directly or indirectly in the management of those undertakings (without prejudice to their rights as shareholders) if their subsidiaries have business models and operations that are independent from one another. 

• The Recitals make clear the intention was for this exemption to be narrowly interpreted, and transposition of this exemption into Member State laws will need to be carefully monitored. 

Large subsidiary undertakings with listed securities

• The amendments extend the subsidiary reporting exemption. 

• The subsidiary exemption allows subsidiaries not to have to report on an individual basis if they are included in the consolidated disclosures of their parent. However, large undertakings with transferable securities admitted to trading on an EEA regulated market were carved out from the subsidiary exemption and so were required to report individually irrespective of whether they were included in their parent’s consolidated report. 

• Under the amendments to the CSRD, these large undertakings will now be able to rely on the subsidiary exemption. Again, the transposition of this exemption into Member State laws will need to be carefully monitored. 

Value chain cap

• A cap on information that may be required to be provided by certain entities in the value chain has been introduced. 

• Undertakings with fewer than 1,000 employees (“protected undertakings”) may decline to provide information for purposes of CSRD reporting exceeding the information to be specified in voluntary sustainability reporting standards.

• Undertakings reporting under the CSRD are required to identify protected undertakings and to specify whether information being requested/required for purposes of CSRD reporting exceeds the cap. Contractual provisions which are not in compliance with these requirements may be deemed invalid.

• For the purposes of identifying protected undertakings, reporting undertakings will be able to rely on a self-declaration from undertakings in their value chain, without any requirement to verify the information unless they know, or can reasonably be expected to know, that the declaration is manifestly incorrect.

Information exemptions and reliefs

• Where undertakings are not able to obtain all of the information required from their value chain, they may for the first 3 years of reporting explain the reasons for this, the efforts made and future plans to obtain the information. At the end of the 3 years, the reporting requirements must be met either by way of direct information from value chain undertakings or estimates. As the 3-year period is not relevant to the value chain cap referred to above, presumably where this information cannot be obtained from entities in the value chain able to rely on the value chain cap, it would need to be provided by way of estimates.

• Undertakings may rely on additional information exemptions, subject to fulfilling specified conditions and criteria. These information exemptions relate to situations where:

  • disclosure is seriously prejudicial to the undertaking’s commercial position;

  • the relevant information corresponds to intellectual capital, intellectual property, know-how, technological information, or the results of innovation, that qualifies as a trade secret;

  • the relevant information is classified; and

  • the relevant information is to be protected from unauthorised disclosure due to EU legislation or national law or in order to safeguard the privacy or security of a natural person or the security of a legal person.

• Reliefs are also provided allowing parent undertakings to exclude information in relation to undertakings acquired, merged, or divested during the financial year. However, where this relief is relied on, undertakings are still required to indicate any significant event that affected subsidiary undertakings during the financial year and that has an effect on the group’s impacts, risks or opportunities related to sustainability matters.

Removal of sector-specific reporting standards

• The power of the Commission to adopt sector-specific reporting standards has been removed. This has been replaced with the ability for the Commission to develop sector-specific guidance on the application of the European Sustainability Reporting Standards (ESRS), including guidance on identifying sustainability matters likely to be material for a typical undertaking operating in that sector. 

• Any such guidance would be based on demand from reporting undertakings and based on consultations with relevant stakeholders and may take into account relevant international standards.

CS3D

Scope

• The CS3D is now only applicable to:

Deletion of the transition plan requirement

• The provision requiring undertakings to adopt and put into effect a transition plan has been deleted in its entirety. 

• This deletion does not prohibit Member States from adopting their own transition requirements at a domestic level. 

• In addition, the requirement under the CSRD to disclose a transition plan (if the undertaking has one) remains.

Due diligence

• The risk-based approach to due diligence specified in the current version of CS3D remains, with clarifications on the information to be used for these purposes, as follows:

  • undertakings are required to conduct a scoping exercise, based solely on reasonably available information, to identify general areas across their chain of activities (including business partners) where adverse impacts are most likely to occur and to be most severe; and

  • following the scoping exercise, undertakings are required to conduct an in-depth assessment in the areas where adverse impacts were identified to be most likely to occur and most severe.

• When conducting the in-depth assessment, undertakings may prioritise obtaining information from direct business partners (where it can be obtained from various sources) and may prioritise assessing areas involving direct business partners (where the risks identified are equally likely to occur or equally severe with other areas).

Value chain / information cap

• When conducting the in-depth assessment for their due diligence, undertakings may only request information from business partners where that information is necessary, and – where the business partner has fewer than 5,000 employees – only when the relevant information cannot reasonably be obtained by other means.

Termination / suspension of business relationships

• References to the requirement in certain circumstances and as a last resort to temporarily suspend or (where other actions have failed and the potential/actual adverse impact is severe) to terminate business relationships, have been replaced with a requirement to, where permitted by the governing law, suspend business relationships with respect to the activities concerned until the impact is addressed. 

• While the change in language introduces some additional nuance, it is not clear that this will result in a material change in practice. 

Penalties and civil liability

• Penalties for non-compliance are to be capped at 3% (rather than a minimum maximum of 5% under the existing CS3D) of the net worldwide turnover of the undertaking. 

• The Commission is to develop guidance outlining how pecuniary penalties are to be calculated. 

• Where prioritisation decisions are made by in-scope entities for the application of the due diligence obligations, the mere fact that a company did not address a less significant adverse impact shall not expose it to penalties.

• The requirement for a harmonised EU-wide civil liability regime (including the harmonised position allowing trade unions or NGOs to bring claims on behalf of injured parties) has been deleted. However, civil liability may still arise under the general tort law regimes of many Member States in case damage was directly caused by the breach of the due diligence obligation. National procedural laws may also allow activist organisations to bring claims and / or to support the alleged victim.

Application date and review 

• The deadline for transposition of the CS3D has been postponed by one year to 26 July 2028, with in-scope undertakings required to comply with the new measures by 26 July 2029 (and to publish disclosures required under CS3D by 1 January 2030). 

• The Commission is to review implementation of the CS3D and its effectiveness by 26 July 2031 and every five years after that.