EU Omnibus Q&A: What businesses need to know

The EU Omnibus Proposal has triggered significant changes in sustainability reporting, leaving many companies uncertain about their next steps. With CSRD thresholds rising, reporting requirements shifting, and voluntary frameworks like VSME gaining traction, businesses are reassessing their ESG strategies.

It’s important to note that Omnibus is still a proposal—not yet law. The European Parliament and Council are reviewing it, and the approval process could take over a year, with potential amendments before the final version is adopted. Until then, existing CSRD requirements remain in place, and businesses should continue preparing accordingly.

To help you navigate these changes, we’ve compiled the most pressing questions companies are asking—from regulatory obligations and financial considerations to the future of ESG reporting. Whether you’re continuing with CSRD, transitioning to VSME, or evaluating your long-term sustainability approach, this Q&A provides the clarity you need to move forward with confidence.

CSRD scope and reporting obligations

What are the key changes to CSRD under the Omnibus Proposal?

The employee threshold for mandatory CSRD reporting has been raised to 1,000 employees, exempting thousands of mid-sized companies. The turnover and balance sheet criteria remain unchanged at €50M turnover or €25M balance sheet total.

Does the 1,000-employee threshold apply to FTE or total headcount?

Companies can report using either FTE (full-time equivalents) or total headcount, but they must disclose their chosen methodology. This is outlined in ESRS S1, paragraph 50b and 50d.

Are contractors and temporary workers included in the 1,000-employee threshold?

No, the threshold only includes direct employees. Contractors, freelancers, and temporary workers are not counted toward the 1,000-employee limit.

Does the threshold apply to EU-based employees only, or does it include global employees?

For EU-based companies, the 1,000-employee threshold includes global employees, meaning multinational firms must count their entire workforce.

If my company passes the financial thresholds (€50M turnover or €25M balance sheet) but not the 1,000 employee threshold, do I still have to report on CSRD?

No, your company must pass the 1,000 employee threshold AND pass at least one out of two of the financial thresholds.

If a company falls below the CSRD threshold but later exceeds 1,000 employees, when does reporting begin?

If a company surpasses 1,000 employees in 2027, it must report in 2028 for the previous fiscal year.

If my country has already implemented CSRD into national law, what do I do now?

Until the Omnibus is fully approved and adopted, existing national CSRD laws remain in effect. Companies should continue preparing unless their national government explicitly advises otherwise.

What are the risks of stopping with ESG reporting altogether?

‍Companies that stop ESG reporting risk major financial and operational setbacks. Banks and investors increasingly offer lower interest rates and better financing terms to businesses with strong ESG performance. Large clients and supply chain partners often require ESG disclosures, meaning companies without them risk losing major contracts.Furthermore, ESG reporting helps businesses assess climate and social-related risks—such as supply chain disruptions due to extreme weather or changing labor regulations—allowing them to implement mitigation strategies.

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The Future of ESG reporting and the shift to VSME

What is VSME, and why was it introduced?

VSME (Voluntary Sustainability Reporting Standard for SMEs) is a streamlined ESG reporting framework designed for small and medium-sized enterprises (SMEs) that fall below the CSRD threshold. Developed by EFRAG — the same organization responsible for the ESRS (European Sustainability Reporting Standards) — VSME aligns closely with ESRS while offering a simplified approach. Its purpose is to help SMEs enhance transparency and demonstrate sustainability commitments without the complexity and administrative burden of full CSRD compliance.

Should I continue reporting on CSRD, or switch to VSME?

It depends on your company’s strategy and market position. Companies competing on a European or global level often stick with CSRD to maintain credibility and a competitive edge, especially now that audit requirements have been removed, lowering compliance costs.

For businesses that struggled with CSRD timelines or lack the scale to support full compliance, VSME offers a simpler alternative while still demonstrating sustainability commitment. It also provides a standardized way to share ESG data with investors, banks, and enterprise customers.

Why choose VSME over GRI or other voluntary reporting frameworks?

VSME builds directly on CSRD principles, making it easier for EU businesses to align with future regulations. It is also expected to become the most widely used voluntary standard in the EU, ensuring greater comparability and usability.

Is reporting under VSME more cost-effective?

Yes, reporting under VSME is significantly more cost-effective compared to mandatory CSRD reporting. One of the biggest savings comes from the exemption from the CSRD audit, which can cost between €50,000 and €150,000. Additionally, VSME requires less extensive data collection and reporting complexity, reducing the time commitment for internal teams and minimizing the need for external consulting services.

Will large companies still request ESG data from suppliers post-Omnibus?

Yes. Large corporations still need sustainability data from suppliers, but they will likely request disclosures at the VSME level rather than full CSRD reports, in line with official Omnibus recommendations.

Compliance and financial considerations

If a company expected the Omnibus to pass and didn’t report in 2026—but the proposal is rejected, what happens?

Companies that fail to report under CSRD while it is still in effect could face penalties. Businesses should continue preparing to avoid compliance risks.

How does financial consolidation affect CSRD obligations?

If a company voluntarily consolidates its financial reporting and surpasses CSRD thresholds, then CSRD reporting becomes mandatory.

For those reporting under CSRD, how does the Omnibus impact value chain reporting?

Value chain reporting is now limited to Tier 1 (direct) suppliers instead of full supply chain disclosures.

How does the Omnibus affect EU Taxonomy and CSDDD thresholds?

EU Taxonomy: Companies with less than 1,000 employees and turnover below €450M can opt out of mandatory Taxonomy reporting.

CSDDD: The thresholds remain unchanged but are now aligned with EU Taxonomy rules.

If a company is no longer in CSRD scope, does that mean it is also exempt from EU Taxonomy and CSDDD?

Yes. Companies exempt from CSRD may also fall outside the scope of EU Taxonomy and CSDDD obligations.

Omnibus timeline and next steps

When will the Omnibus Proposal be approved and take effect?

The Omnibus is currently under review by the European Parliament and the EU Council. Some fast-tracked changes, such as CSRD reporting delays, may be approved sooner. Full approval could take anywhere from 6 months to 1.5 years.

What happens if the Omnibus Proposal is rejected?

If rejected, the original CSRD requirements remain in place, meaning companies must comply with the existing 250-employee threshold and original reporting deadlines. Businesses should continue preparing unless official guidance states otherwise.

That said, the likelihood of a full rejection is low. Germany, France, and the largest EU party (EPP) are backing the proposal, and it is unlikely the European Commission would have published Omnibus if there was a serious risk of it failing entirely. A more likely outcome is that amendments will be made during the legislative process, potentially refining some provisions rather than overturning them completely.

Practical next steps for businesses

Should companies continue preparing for CSRD or wait for the Omnibus?

Companies should continue preparing for CSRD unless and until the Omnibus is officially adopted.

When will Coolset support VSME reporting on its platform?

Coolset's VSME product is now ready. Please schedule a time with our team to discuss it.