On 24 February 2026, the EU adopted the Omnibus I Directive, significantly narrowing the scope of mandatory sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD).
The change is material. Under the original CSRD framework, which required organisations to report against the European Sustainability Reporting Standards, the scope was intended to expand progressively to cover a wide range of companies. The Omnibus I Directive now limits mandatory ESRS reporting to companies with more than 1,000 employees and more than 450 million euros in annual turnover.
Organisations below these thresholds are no longer required to produce full CSRD-compliant reports. Voluntary reporting remains available, and organisations participating in supply chains of large companies may face contractual or indirect obligations, but the mandatory statutory requirement has been significantly narrowed.
What Changed and Why
The scope reduction is part of the EU's broader competitiveness agenda, responding to concerns from business groups that the CSRD's original ambition would impose disproportionate reporting burdens on mid-sized companies. The Omnibus package also includes the Omnibus I Directive's modifications to the Corporate Due Diligence Directive, reflecting a wider recalibration of EU sustainability regulation towards a more targeted approach.
Critics of the change, including sustainability reporting advocates, argue that the scope reduction undermines the EU's stated commitment to transparent non-financial disclosure and risks creating a two-tier system where only the largest companies are held to account for their sustainability performance.
What Remains in Place
For companies that remain within scope, those above the 1,000-employee and 450-million-euro revenue thresholds, the ESRS requirements are unchanged. Reporting obligations cover environmental, social, and governance dimensions. Workforce reporting under ESRS includes employee wellbeing, health and safety, and working conditions, making psychological safety and organisational wellbeing directly relevant to mandatory disclosure obligations for large enterprises.
The ISSB standards, IFRS S1 and S2, remain the international reference framework for investor-grade sustainability disclosure and continue to apply to companies with global reporting obligations.
The Workforce Dimension
An important dimension of ESRS reporting that receives less attention than climate metrics is the social pillar, specifically the requirements around workforce conditions. ESRS standards require large organisations to report on employee health, safety, and wellbeing alongside traditional employment metrics. As wellbeing becomes a formal ESG metric, the question of how organisations measure and report on psychological safety and employee experience is becoming a genuine governance question, not merely an HR one.
HumanSafe Opinion
The following reflects HumanSafe Intelligence's position on this development.
The scope adjustment creates a clearly defined governance challenge for large enterprises: mandatory obligations to report on workforce conditions, with no settled answer to the question of how to generate wellbeing data that is both meaningful and ethically defensible.
Wellbeing data derived through surveillance, inference, or behavioural monitoring carries inherent ethical exposure, and that exposure grows as the regulatory environment tightens. Wellbeing data that is voluntary, declared, and constitutionally protected does not carry that exposure. The ESG reporting obligation makes the distinction between these two approaches materially significant in a way it has not previously been. Large enterprises now have a formal governance reason to ask not just "do we have wellbeing data?" but "is our wellbeing data constitutionally defensible?" Those are different questions, and the second one has not yet been widely asked.
Sources
- Enterprise guide to ESG reporting requirements in 2026 — Pulsora, 2026
- ESG reporting requirements by industry for 2026 — Pulsora, 2026
- Understanding ESG reporting obligations for enterprises in 2026 — Pulsora, 2026
