You spent months trying to figure out whether your company would fall under the obligations of the CSRD - the EU Corporate Sustainability Reporting Directive. Then, almost overnight, the rules changed: higher thresholds, delayed deadlines, and a drastic reduction in the number of companies required to report.
For many, the first reaction was relief. Understandable. But anyone managing supply relationships, large clients or banking relationships knows the real question comes next: does this regulatory slowdown mean sustainability has become less urgent? The answer is no - and understanding why is exactly what this article is about.
The Omnibus Package is not a step backwards. It is a rationalisation: the EU has chosen to concentrate formal obligations on the main players in the value chain, knowing that they will pull the rest of the market - including SMEs - towards greater transparency. Including the SMEs that now feel outside the perimeter.
What the Omnibus Package I has changed
On 24 February 2026, the EU formally adopted the Omnibus Package I, a simplification initiative that redesigned the scope of both the CSRD and the CSDDD (Corporate Sustainability Due Diligence Directive). The stated objective: reducing administrative burdens by 25% to allow companies to focus on the real transition rather than paperwork.
The practical result was a significant contraction in the number of companies directly obligated to produce a sustainability report. Here is what changed:
Before
250 employees
Now (Omnibus)
1.000 employees
Before
€50M
turnover
Now (Omnibus)
€450M
turnover
Both thresholds must be exceeded for two consecutive financial years. Source: Omnibus Package I, EU, February 2026.
The numerical impact is immediate. The European Commission had estimated that approximately 50,000 companies would fall under CSRD before the reform. After raising the size parameters and introducing the new CSDDD filters, the number of companies under direct reporting obligation has dropped to around 13,000–15,000 large groups. This means that over 80% of companies originally expected to be caught - mainly mid-caps and SMEs - have exited the direct obligation.
~50.000
companies in scope before the Omnibus Package
~15.000
large companies in scope after the reform
Source: European Commission; UNGCN Italia - Omnibus Package I, 2026
For companies below the new thresholds, reporting remains voluntary and is based on the simplified VSME standards - Voluntary Sustainability Reporting Standard for non-listed SMEs - developed by EFRAG specifically for smaller organisations.
The updated timeline: key dates
Not only the thresholds changed - so did the calendar. Under Directive (EU) 2025/794, known as the "Stop the clock" directive, the EU moved forward the reporting debut for different waves of companies.
Source: Directive (EU) 2025/794 - Stop the clock; UNGCN Italia
The two-year delay for the second wave is not a holiday period. As the next section explains, pressure will not arrive from the regulator - it will arrive from your largest clients, who remain within the obligation and need your ESG data right now.
The cascade effect: why Scope 3 reaches companies "outside" the rules
This is the point most often underestimated. If your company has moved above the Omnibus thresholds, you might think you have bought time. In reality, the risk is arriving unprepared for demands that come not from legislation, but from your value chain.
The roughly 15,000 large companies still under CSRD obligations must report their Scope 3 emissions - that is, the emissions generated across their entire value chain, suppliers included. As we detailed in our April article, supply chain emissions are on average 11.4 times larger than a company's direct operational emissions (Scope 1 and 2), according to CDP's 2024 Supply Chain Report.
For a large company, "doing the report" means asking its suppliers for ESG data. Anyone who cannot provide them becomes a compliance risk - and a candidate for removal from the vendor list.
This mechanism is reinforced by the CS3D - Corporate Sustainability Due Diligence Directive. Unlike the CSRD, which asks companies to report their impacts, the CS3D requires them to act: large companies must actively prevent and mitigate negative impacts on the environment and human rights across their supply chains. The penalties the directive provides are explicit:
up to 5%
of the company's net turnover
Penalty applicable by member states for CS3D violations · Source: Directive (EU) 2024/1760, Article 27
With figures of this magnitude, large groups cannot afford suppliers that cannot document their environmental and social impact. Supply chain transparency is no longer an ethical preference - it is a contractual requirement.
Is your company ready to respond to supply chain ESG requests?
→ Get in touch
From compliance burden to competitive advantage: the VSME standard
In this context, the winning strategy is not to wait for the obligation but to anticipate the market. For companies that want to stay competitive without the complexity of the full ESRS standards designed for large organisations, EFRAG has developed the VSME - a standard built specifically for small and medium-sized enterprises, with a modular structure that adapts to the size and complexity of the organisation.
The VSME offers two main pathways:
Base Module: the entry-level solution designed for micro-enterprises and those approaching sustainability reporting for the first time. It collects the essential quantitative data - energy consumption, CO₂ emissions, waste management. No deep strategic analysis required, but it provides exactly the numbers that large client companies need to include in their Scope 3 calculation. Agile, concrete and directly usable.
Comprehensive Module: the pathway for more structured SMEs or those occupying a critical position in a supply chain. Beyond quantitative data, it adds the narrative dimension: environmental policies, risk management, future objectives. This transforms numbers into a readable business strategy - and makes the company a credible partner for banks and large clients.
Adopting the VSME today delivers three concrete advantages.
Staying on vendor lists: many large companies still under CSRD obligation are already inserting VSME reporting as a prerequisite in their supplier portals. Without this data, companies risk dropping in supplier priority or being excluded from new tenders.
Better financing conditions: the banking system is progressively integrating ESG criteria into creditworthiness assessments. Standardised, verifiable data through the VSME can translate directly into more favourable financing terms.
One document to answer everyone: this is often the most immediate benefit for companies in production. Adopting a shared standard means responding with a single structured report to multiple clients' requests, rather than spending weeks filling in different, largely redundant questionnaires from various procurement teams.
You are no longer at the receiving end of the client's questions. You are offering the solution - with structured, verifiable, recognised data.
How Kyklos Carbon can help
Having the right standard is a starting point, not a finish line. For many companies the real obstacle is rarely the willingness - it is figuring out how to do it in an orderly way without disrupting operations. At Kyklos Carbon, we work alongside companies throughout the entire journey, with a clear objective: making sure your company can respond to supply chain requests without wasting resources.
- ESG context and supply chain analysis: we map existing activities and analyse what your main clients are actually asking for. Understanding the maturity of your key stakeholders allows us to build a foundation that protects your contracts, not just fills in forms.
- Material topic and indicator selection: we identify only what genuinely matters for that specific company and sector. No copy-pasting from frameworks designed for multinationals.
- Report construction (VSME or ESRS): a readable document, oriented towards objectives, structured according to real need. For companies outside the new Omnibus thresholds, we work with the VSME standard - Base or Comprehensive Module - producing output that is immediately usable with banks and procurement teams.
- Ongoing monitoring support: the value of a report grows with the ability to track progress and adapt strategy over time. We turn data into concrete operational decisions.
Let's build together the path that turns ESG reporting from a compliance obligation into a competitive advantage.
Conclusion
The Omnibus Package has moved the regulator's clock. The market's clock keeps running. The large companies remaining under CSRD obligation need reliable data for their Scope 3 and are legally responsible for what happens in their supply chains.
The CSRD is not a bureaucratic requirement to be postponed - it is the direction in which the market is already moving. Companies that prepare now, with a clear method and solid data, are not just complying with the rules: they are building an advantage that those who wait will struggle to recover quickly.
A report that nobody uses is a cost. A report that guides decisions is an investment. The difference is not in the data - it is in the vision that data makes possible.
Sources
- UNGCN Italia - Omnibus Package: EU final approval (2026)
- Accountancy Europe - Views on Omnibus proposal to reduce CSRD scope
- Directive (EU) 2024/1760 - CS3D, Article 27 (Penalties)
- Assolombarda - CS3D: New sustainable due diligence obligations for companies.
- CDP - Supply Chain Report 2024: Strengthening the Chain
CSRD and the Omnibus Package: who is really obligated - and why SMEs cannot afford to relax.