Omnibus I Reforms

After over 12 months of legal uncertainty, the EU has finalised the Omnibus I reforms and there is certainty as to who will need to report under the EU Corporate Sustainability Directive (CSRD) and EU Corporate Sustainability Due Diligence Directive (CS3D).

To recap and in summary, CSRD required around 46,000 companies established in the EU, and non-EU entities with a large presence in the EU, to report in their annual accounts their ESG impacts and opportunities. Reporting created greater transparency but became very costly and burdensome due to uncertain obligations, information requests across global value chains and untested ESG reporting standards.

CS3D required almost 17,000 EU and non-EU established companies to adopt due diligence processes to identify, mitigate and end human right adverse impacts across their value chain. It also provided an opportunity for individuals who suffered harm in the form of environmental impacts to bring civil claims against these companies.

The thresholds that EU and Non-EU companies now need to meet to be in scope of these Directives following the Omnibus I Reforms, is much higher than they were when the legislation was enacted, but not as high as initially expected for CSRD. CSRD will now apply to around 16,000 companies and CS3D to around 6,000. Both Directives still apply to non-EU companies with a large presence in the EU, which was a geopolitical point of contention.  

The main changes to thresholds, in summary, as when applied to corporate groups these thresholds are much more complex, and dates of application are as follow:

There were several other changes made that will facilitate the wider application of these Directives across value chains in a much more efficient way. For example, CSRD does not allow for mandatory information requests from companies who do not themselves have 1,000 employees., although these companies may voluntarily provide information or be required to do so by contract.

CS3D no longer allows for EU wide civil liability following environmental or human right impacts and return this power to Member States.  Although breaches of the obligations mandated by CS3D may result in penalties of up to 3% of a company’s worldwide turnover. 

These Directives apply across all sectors to thousands of companies in the EU and non-EU companies that work in the EU and still create very onerous obligations for many of our clients.  This is the time to find out whether you still have obligations under these Directives and how you may have to change your reporting following the new Omnibus reforms.  We have advising on CSRD and CS3D pre and post Omnibus and would be delighted to have a confidential conversation.

Please contact Begonia Filgueira if you would like to discuss further.