On 16 December 2025, the European Parliament approved the Omnibus I reform package, which amends, among others, the EU’s Corporate Sustainability Reporting Directive (2022/2464/EU) (CSRD) and the Corporate Sustainability Due Diligence Directive (2024/1760/EU) (CS3D).
In this Legal Flash, we outline the key aspects of the reform (the “Simplification Directive”)—which is expected to receive formal Council approval in January 2026—and its practical implications for Spanish and Portuguese companies amid regulatory uncertainty caused by delays in transposition of the CSRD and the “Stop-the-Clock” Directive.
Key points on sustainability disclosure (CSRD)
- Narrowed scope of application. The reform significantly refocuses CSRD disclosure obligations on the largest and most impactful companies as from 1 January 2027. From 1 January 2027, only companies meeting the thresholds below will be required to report under CSRD.
|
| No. of employees | Net turnover | Subjection criterion |
| EU companies/issuers (individual level) | = 1000 on average during financial year | = €450M | Exceed both thresholds for two consecutive |
| EU Group (consolidated basis) | = 1000 on average during financial year | = €450M | Exceed both thresholds for two consecutive |
| Third-country companies with significant activity in the EU |
| = €450M and has a subsidiary or branch that, in the previous year, exceeds €200M. | Exceed the €450M threshold for two consecutive financial years, and the €200M threshold in the preceding financial year. |
Credit institutions and insurers are subject to the same general criteria.
The thresholds will be reviewed every five years.
Companies outside the mandatory scope may report on a voluntary basis using simplified voluntary standards to be adopted by the European Commission.
- Limited assurance. Sustainability information will be subject to limited assurance, aimed at ensuring there are no material misstatements. By July 1, 2027, the Commission will approve a delegated act that will detail the specifics.
- Restrictions on information requests along the value chain. Companies in scope may only request information for reporting purposes from entities within their own value chain, limiting the burden on third parties beyond that chain.
- Review clause. A review clause is introduced, to assess the Simplification Directive´s impact on EU competitiveness and its alignment with the European Green Deal. The review will evaluate the use of voluntary standards by April 30, 2029, and by April 30, 2031 a potential extension of the CSRD´s, considering practical experience and the principle of proportionality.
Key points on due diligence (CS3D)
- Narrowed scope of application. The new in scope thresholds are three times higher than the current ones, as a result it is expected that CS3D will impact approximately 1,600 companies instead of 7,000.
The following table indicates the companies that will remain affected by the CS3D:
The Commission must present an evaluation report on practical application no later than 26 July 2031, including an assessment of the effectiveness of these thresholds.
- Transposition and application are deferred. Obligations will generally apply to all companies in scope from 26 July 2029.
- Changes in the approach and scope of due diligence. The reform:
- Consolidates and clarifies the risk based approach, as opposed to the so called entity based approach.
- Limits for information within the chain of activities, as well as the obligation to consult with stakeholders.
- Climate transition plans. Mandatory climate transition plans are removed. However, where companies have such plans, they must disclose them in their sustainability reports.
- Liability and sanctions. The EU-level harmonised civil liability regime is removed. Each Member State must ensure access to judicial remedies and full compensation for damage caused to a natural or legal person in accordance with its domestic legal system.
A harmonized ceiling for sanctions is set at 3% of worldwide turnover. - Harmonisation and anti–gold plating. Member States are prohibited from imposing general due diligence obligations that deviate from CS3D, in order to prevent gold plating and ensure a level playing field.
- Review clause. By 26 July 2031, the Commission must submit a report assessing, among other things, the CS3D`s scope, the definition of “chain of activities", the potential need for a more sectoral approach, the adjustment of climate-related rules, and the overall effectiveness of the regulations in addressing adverse impacts