After the EU's Omnibus I directive, the CSRD now applies only to companies with more than 1,000 employees and over EUR 450 million in turnover, sharply cutting the reporting population. For investors this means less standardized issuer ESG data, so asset owners must lean harder on engagement, estimates and direct requests.
The Corporate Sustainability Reporting Directive was designed as the data backbone of European sustainable finance: a single, audited, machine-readable stream of corporate ESG information flowing to the investors who allocate trillions across the bloc. In February 2026, the EU Council signed off on the Omnibus I simplification package, and the backbone got considerably thinner. For universal asset owners — investors who hold a slice of nearly every listed European company — the change is not a footnote. It reshapes what data they can expect, from whom, and when.
What did the Omnibus actually change?
The headline is scope. The original CSRD pulled companies into reporting using a two-of-three test (employees, turnover, balance-sheet total). The Omnibus replaced that with a single, higher dual threshold: a company is in scope only if it has more than 1,000 employees and more than EUR 450 million in turnover. Both conditions must be met. The narrowed scope applies for financial years beginning on or after 1 January 2027.
The practical effect is a dramatic reduction in the reporting population. Tens of thousands of mid-sized companies that were preparing to report under the original directive now fall outside it. The European Commission framed this as a competitiveness measure — cutting compliance cost for smaller firms — but for the investors who were promised comparable data across the market, it removes a large share of the dataset before it ever arrived.
What happens to the "Wave 1" companies?
The largest companies — the so-called Wave 1 cohort that began reporting for financial year 2024 — were the first to produce CSRD disclosures. The Omnibus gives many of them a transition exemption, with a number falling out of scope for FY2025 and FY2026. Those that remain in scope can use the ESRS quick-fix relief adopted in July 2025, which adds real flexibility to FY2025 and FY2026 reporting.
For an asset owner, this creates an awkward discontinuity. A company that published a detailed sustainability statement for 2024 may publish a lighter one — or none under the directive — for 2025 and 2026. Time series that analysts had begun to build risk breaking after a single year. The lesson many large owners have drawn is to treat the first wave of CSRD data as a useful but incomplete baseline rather than the start of a guaranteed, comparable run.
Why this matters for universal owners specifically
A stock-picker can route around a data gap by avoiding the names where information is poor. A universal owner cannot: by design it holds the whole market, including the mid-cap companies that have now dropped out of mandatory reporting. The CSRD's original promise was precisely suited to this kind of investor — standardized, audited, double-materiality data across the entire investable universe, reducing the cost of understanding systemic exposures like climate transition risk or supply-chain dependencies.
With the reporting population cut, three gaps open at once. Coverage shrinks, because fewer issuers report. Comparability weakens, because companies using quick-fix relief disclose less and on different bases. And continuity is interrupted, because exemptions can switch a company's reporting on and off year to year. Each of these raises the cost of the portfolio-level analysis universal owners depend on.
The one thing worth internalising: the floor moved, the expectations did not
The most important insight for allocators is that the Omnibus lowered the regulatory floor, not the market's expectations. Institutional investors, lenders and large customers continue to ask companies for sustainability data whether or not a directive compels it. Many in-scope and newly-out-of-scope companies are expected to keep reporting voluntarily because their financing and commercial relationships demand it.
This flips the burden in a way asset owners should plan around. Where the CSRD once made disclosure an automatic byproduct of EU law, comparable data is now something an owner must request, incentivise and verify through its own stewardship. The funds that maintain the richest ESG datasets over the next few years will be the ones that build direct data expectations into engagement, not the ones that wait for regulation to deliver it.
How the data picture changes in practice
Expect a more layered information environment. The largest companies will still produce substantial disclosures, increasingly under global frameworks (ISSB-aligned standards in particular) that travel beyond the EU. Mid-sized issuers will offer a patchwork: some reporting voluntarily, some responding to investor questionnaires, some going quiet. Data vendors will fill more of the gap with modelled estimates, which are useful for portfolio aggregates but weaker for security-level decisions and engagement.
For an investment team, the workflow shift is concrete. Reconcile holdings against the new scope thresholds to see where mandatory data disappears. Flag the names where you previously relied on CSRD figures and now need an alternative source. And decide, deliberately, where modelled data is good enough and where you will spend engagement capital to get reported numbers directly from the company.
What to watch next
The Omnibus is not the last word. The directive obliges the Commission to assess scope extension by April 2031 and every three years thereafter, so the reporting population could widen again. In parallel, the global centre of gravity is shifting toward ISSB-based standards, which several major jurisdictions are adopting and which large EU companies increasingly use alongside or instead of ESRS. For a universal owner, the strategic read is that EU mandatory disclosure has become narrower and more uncertain, while globally comparable, investor-grade climate data is consolidating around a different set of standards — and that is where forward-looking allocators are pointing their data and engagement effort.