Omnibus Cuts Non-EU Companies in CSRD Scope from 10,000 to 1,200 as EFRAG Resumes N-ESRS Standard Development

The number of non-EU companies remaining in scope of the EU's Corporate Sustainability Reporting Directive following the Omnibus simplification initiative will fall from approximately 10,000 to around 1,200, an 88 percent reduction, according to new estimates from the European Financial Reporting Advisory Group. EFRAG has simultaneously announced the resumption of its work on the sustainability reporting standard for non-EU groups, known as N-ESRS, with plans to release a draft standard for consultation in mid-July following a period during which development was suspended pending the outcome of the Omnibus process. The N-ESRS technical advice is expected to be submitted to the European Commission in January 2027 after a 100-day consultation period and dedicated field test with interested companies.

 

The Revised Scope and Country-Level Impact

 

The Omnibus process revised the CSRD scope for non-EU companies from the original threshold of revenues greater than €150 million with an EU subsidiary or branch generating €40 million, to a significantly higher threshold of net EU revenue greater than €450 million for two consecutive years and an EU subsidiary or branch with revenues above €200 million. This substantial increase in the revenue thresholds explains the 88 percent reduction in the number of companies affected, concentrating the mandatory reporting obligation on the largest and most economically significant non-EU groups operating in the European market. By country, EFRAG estimates that approximately 350 to 450 US companies will remain in scope alongside 150 to 200 UK companies, 100 to 150 companies from Switzerland and Japan respectively, and 30 to 80 companies from other jurisdictions.

The concentration of remaining non-EU companies in the United States and United Kingdom reflects the scale of commercial activity these economies conduct through EU-based subsidiaries and branches. For US companies in particular, the N-ESRS will create mandatory sustainability reporting obligations that go beyond what the SEC's now-rescinded climate disclosure rules would have required, covering not only climate but a broader range of environmental, social and governance topics under EFRAG's 12-standard framework. The practical implication for approximately 400 large US multinationals is that CSRD compliance remains a material regulatory requirement regardless of domestic US climate disclosure policy developments.

 

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The N-ESRS Framework and Its Distinctive Approach

 

EFRAG's upcoming draft standard will focus reporting requirements for non-EU companies specifically on their sustainability-related impacts, which is a narrower scope than the full ESRS applied to EU companies that encompasses both impacts and risks and opportunities. This distinction reflects a policy decision to tailor the disclosure obligations to the primary purpose of the N-ESRS from an EU regulatory perspective, which is to understand the impacts of large non-EU groups on European stakeholders and ecosystems rather than to provide the full investor-focused risk and opportunity information required from EU companies. The N-ESRS will nonetheless encompass the same 12 standards as the EU standard, covering general requirements, general disclosures, climate change, pollution, water and other environmental and social topics, alongside four reporting areas including governance, strategy, impact management and metrics and targets.

The impact-focused approach of the N-ESRS is notable because it means non-EU companies will not be required to apply double materiality in the same way as EU companies, reducing the analytical complexity of the reporting exercise while maintaining the coverage of the most material sustainability topics. EFRAG is inviting companies to express interest in participating in a dedicated field test of the exposure draft once released in mid-July, providing an opportunity for affected multinationals to assess the practical implications of the proposed standard before the consultation period closes. The 100-day consultation timeline and January 2027 technical advice submission suggest the N-ESRS could be adopted and applicable for reporting periods beginning in 2028 or 2029.

 

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Implications for Global Sustainability Reporting Convergence

 

The Omnibus-revised N-ESRS scope creates a clearer and more manageable set of mandatory EU sustainability reporting obligations for large non-EU multinationals, reducing the compliance population to those with the most significant European operations while maintaining meaningful coverage of the largest global groups. The continued development of a dedicated non-EU standard rather than simply applying the ESRS to all companies in scope reflects a recognition that the European regulatory context and the nature of non-EU companies' relationships with the EU market warrant a tailored approach. For companies now outside the reduced N-ESRS scope, the voluntary reporting standard being developed for mid-sized companies out of CSRD scope may still provide a relevant framework for sustainability disclosure to European customers, investors and business partners.

Whether the N-ESRS can achieve meaningful alignment with the ISSB standards that govern sustainability reporting in many of the home jurisdictions of the 1,200 companies remaining in scope will be an important design consideration during the consultation period. Companies already reporting under ISSB-aligned frameworks in the US, UK, Japan or Switzerland will be seeking clarity on how much additional work the N-ESRS requires beyond their existing disclosure programmes. The degree of harmonisation achieved between the N-ESRS and international standards will significantly affect the practical compliance burden for the large multinational companies that remain in scope following the Omnibus simplification.