Omnibus Simplification in Practice: Early Signals From France, Germany and Italy on CSRD Scope Reduction

The Omnibus I Directive entered into force on 18 March 2026 and removed roughly 80 per cent of companies from CSRD scope. Many of those companies stopped work immediately.

Some of them were not entitled to.

This is the gap that matters in 2026. Omnibus is EU law, and EU directives do not bind companies. They bind Member States, which then have to write the changes into national statute. Until that happens, the law a company actually answers to is whatever its own country currently has on the books, and in France, Germany and Italy that means three different answers to the same question.

Member States have until 19 March 2027 to transpose. That leaves a window of roughly seven months from now in which a company can be simultaneously out of scope under the directive and in scope under national law.

The Rule That Catches Everyone

Start with the provision that generates the most confusion, because it determines whether a de-scoped company can actually stop.

A Wave 1 company that began reporting on financial year 2024 and now falls below the new thresholds of 1,000 employees and 450 million euro net turnover must continue reporting until financial year 2027, unless its Member State provides an exemption.

Omnibus permits Member States to exempt such companies for financial years 2025 and 2026. It does not grant the exemption. That is a national legislative act, and it requires the country to have legislated.

So the practical instruction for any Wave 1 company that has dropped below the thresholds is uncomfortable but simple. Until your Member State has put the exemption into national law, assume you still have a legal obligation to report for financial years 2025 and 2026 under the existing national framework, using whatever Quick Fix reliefs are available. Falling out of the directive's scope is not the same as being released from your national statute.

Mandatory exit from scope arrives for financial year 2027 regardless. The question is only what happens in the two years before that.

France: First To Transpose, Now Unwinding

France moved earliest and most cleanly. It was the first Member State to transpose the CSRD, through an ordinance of 6 December 2023 and an implementing decree, folding the requirements into the Commercial Code with effect from 1 January 2024. French companies have operated under a settled national regime longer than almost anyone in the bloc.

That head start is now a liability of a particular kind. France has a complete, functioning CSRD framework written into its Commercial Code that reflects the pre-Omnibus thresholds. Unwinding it requires legislative work that is more involved than transposing from a blank page, and it has to be finished before March 2027.

For French Wave 1 companies below the new thresholds, the live question is whether France exercises the transition exemption for financial years 2025 and 2026. Until it does, the Commercial Code obligation stands. A French company that has quietly stopped preparing because Brussels changed the thresholds is exposed, and the exposure is domestic rather than European.

Germany: Two Reforms Behind

Germany is the outlier, and its position is genuinely awkward.

It has still not transposed the original CSRD. The deadline lapsed on 6 July 2024 and the European Commission opened infringement proceedings. A first draft entered the parliamentary process during the previous legislative term but lapsed under the discontinuity principle when the governing coalition collapsed, and had to be reintroduced from scratch. The Federal Ministry of Justice published a fresh draft in July 2025, and the Federal Government adopted a government draft on 3 September 2025, built on the 1:1 transposition principle that leaves minimal room for national variation.

The process then moved properly. On 31 March 2026 the Bundestag's Legal Affairs Committee published a joint amendment from the CDU/CSU and SPD parliamentary groups, incorporating the reductions introduced by Directive (EU) 2026/470. A public hearing followed on 13 April 2026, with expert evidence from a range of interest groups. The stated aim was to complete the legislative process over the summer months. On the available evidence the law had not been enacted as of August 2026, though it may be close: because the Bundesrat has raised no objection, the bill becomes federal law once the Bundestag passes it, subject only to signature by the Federal President and publication in the Federal Law Gazette.

The consequence is that German companies have spent two years in a legal vacuum. With no national CSRD statute in force, the framework created by the earlier German non-financial reporting law remains the operative regime, and entities that would have been Wave 1 reporters have continued to report under it, with many going further voluntarily rather than sit visibly behind their European peers.

There is a timing point here that German companies should not overlook. A CSRD Transposition Act passed on or after 1 January 2026 cannot apply retroactively to financial years already completed when it enters into force. The delay is not simply a deferral; it removes certain years from the new regime altogether.

The German drafts also tried to anticipate what was coming. The draft would exempt companies currently subject to the German non-financial statement rules, but falling below the new thresholds, from CSRD reporting for calendar financial years 2025 and 2026. That is Germany exercising the Wave 1 transition exemption in draft form, which is further than France or Italy have publicly gone. The amendment additionally introduces a value chain cap for medium-sized companies and, notably, a permanently limited assurance requirement rather than an escalation to reasonable assurance.

One gap is worth watching. The September 2025 government draft already carried the 1,000 employee threshold from the Commission's substance proposal, but not the 450 million euro turnover threshold, which was added later in trilogue. The amendment has to close that. Commentators have also flagged an apparently editorial oversight in the transitional provision on auditor appointment, which still refers to financial years beginning before 1 January 2026 and should be corrected during the remaining parliamentary stages.

Germany's Supply Chain Act will also need amending, since the Omnibus revisions to the due diligence directive raise that threshold to 5,000 employees and 1.5 billion euro in turnover.

Italy: On Time, And Now Amending Its Own Amendment

Italy transposed the CSRD on schedule through Legislative Decree No. 125 of September 2024, in force from 25 September, replacing its earlier non-financial reporting decree. It stayed close to the directive text, confining national tailoring largely to the sanctions regime and supervisory arrangements rather than adding substantive requirements. Italian Wave 1 entities reported on financial year 2024 data from the start of 2025.

Like France, Italy now faces the transposition of a transposition, amending Decree 125 to reflect the new thresholds and the exemptions Omnibus permits. And like France, whether Italian Wave 1 companies below the thresholds can stop reporting for financial years 2025 and 2026 depends on a national decision that has to be taken and legislated.

Italy's restraint in the original transposition works in its favour here. A country that gold-plated would have more to unwind.

What Is Still Required Right Now

Cutting through the three national positions, here is what actually binds in August 2026.

Wave 1 companies still in scope must keep reporting. They were never affected by Stop the Clock and remain in scope under the new thresholds. Financial year 2025 and 2026 reporting continues under the existing national framework and the current ESRS, with Quick Fix reliefs available.

Wave 1 companies out of scope must keep reporting until their Member State says otherwise. This is the trap. The exemption exists in the directive and does not exist in national law until legislated.

Wave 2 companies have no 2026 obligation. Stop the Clock moved their first report to financial year 2027, published in 2028. Those that fall below the new thresholds will never report at all.

Wave 3 has ceased to exist. Listed SMEs are out of CSRD scope entirely.

Double materiality still applies to everyone in scope. The revised ESRS, adopted 3 July 2026, cut mandatory datapoints by more than 60 per cent but preserved the double materiality principle. The assessment that consumes the most effort survived the simplification.

The value chain cap does not cover emissions. Companies with 1,000 employees or fewer can decline sustainability data requests exceeding the voluntary standard for smaller companies, but gross Scope 1, 2 and 3 greenhouse gas emissions are carved out of that protection. Suppliers hoping the cap ends carbon questionnaires have misread it, and in-scope companies assuming they can no longer ask have misread it in the other direction.

How Companies Are Actually Reacting

Three patterns are visible, and they diverge sharply.

The clean exit. Companies comfortably below the thresholds, with no listing, no significant EU customers and no lender pressure, have stopped. For a mid-sized private manufacturer that was scrambling to build a materiality assessment, Omnibus was straightforward relief and the response is rational.

The voluntary continuation. A substantial group of de-scoped companies is continuing anyway, increasingly through the voluntary standard for smaller companies, which is emerging as the common language for supply chain data requests. The reasoning is commercial rather than legal. Investors, lenders and large customers still want the data to meet their own obligations, and a company that cannot answer becomes harder to do business with. This is the group for whom out of scope does not mean off the hook.

The stall. The least defensible response, and probably the most common, is companies that have paused without establishing whether they were entitled to. Given that the Wave 1 exemption requires national legislation that France, Germany and Italy have not all completed, some of these companies are accruing a compliance problem while believing they have solved one.

There is also a quieter effect worth naming. Companies that invested heavily in double materiality assessments, data systems and governance during 2024 and 2025 now face a question about what to do with that infrastructure. Dismantling it saves cost. It also destroys the foundation for value chain data requests they will keep receiving, for lender questionnaires, and for any future re-entry into scope. The review clause in Omnibus requires the Commission to assess the new thresholds by 26 July 2031 and, if appropriate, propose revising them, so scope reduction is not necessarily permanent.

What To Do

Establish your position under national law, not the directive. This is the single most important step and the one most often skipped. The question is not whether Omnibus removed you from scope. It is what your national statute currently says, and whether your Member State has legislated the exemption.

If you are Wave 1 and below the thresholds, assume you must report until told otherwise. Get confirmation from counsel in each Member State where you have reporting entities. Do not infer the exemption from the directive.

Run the cumulative test properly. More than 1,000 employees and more than 450 million euro net turnover. Both. Companies still applying the old two of three criteria against 250 employees, 50 million euro turnover and 25 million euro balance sheet are working from a superseded test.

Decide voluntarily rather than by default. If you are genuinely out of scope, make a deliberate choice about whether to continue reporting. The voluntary standard for smaller companies offers a proportionate route with no mandatory double materiality assessment and no required assurance. Continuing is a commercial judgement and a legitimate one. Drifting into silence is not a judgement at all.

Keep the assessment even if you stop the report. A double materiality assessment has value independent of the regulatory obligation, and rebuilding one is considerably more expensive than maintaining it.

Watch each country separately. France, Germany and Italy are at three different stages, and a group with entities in all three cannot resolve its position with a single answer. Germany in particular could enact its base transposition and its Omnibus amendments almost simultaneously, which would change the German position quickly.

The broader read is that Omnibus delivered genuine relief at EU level and created a period of real ambiguity at national level. The relief is not fully available until each Member State legislates, and the countries with the most complete existing frameworks have the most unwinding to do. For companies in France and Italy, that means checking the domestic statute rather than the European headline. For companies in Germany, it means watching a legislature that is now trying to enact two reforms at once, several years late.

Practical Checklist

1. Apply the cumulative Omnibus test, more than 1,000 employees and more than 450 million euro net turnover, rather than the superseded two of three criteria.

2. Establish your obligation under national law in each Member State where you have reporting entities, since the directive does not bind you directly.

3. If you are a Wave 1 company below the new thresholds, continue reporting for financial years 2025 and 2026 unless your Member State has legislated the transition exemption.

4. In France, confirm the current Commercial Code position and whether the exemption has been enacted.

5. In Germany, track the CSRD Transposition Act closely, since it may pass imminently, and note that its draft already exercises the Wave 1 exemption for financial years 2025 and 2026.

6. In Italy, monitor amendments to Legislative Decree 125 of 2024, including the sanctions regime.

7. Diarise 19 March 2027 as the transposition deadline, and treat the period until then as jurisdictionally variable.

8. Note that mandatory exit from scope applies from financial year 2027 regardless of national exemption decisions.

9. Keep your double materiality assessment current if you remain in scope, since simplification did not remove it.

10. Do not rely on the value chain cap for emissions data, since Scope 1, 2 and 3 greenhouse gas metrics are carved out.

11. If out of scope, decide deliberately between stopping, continuing voluntarily under the standard for smaller companies, and maintaining capability without publishing.

12. Retain the underlying data and governance infrastructure, given the review clause requiring the Commission to reassess thresholds by 26 July 2031.

Position as of August 2026. National transposition of Omnibus I is incomplete across the EU and the position in individual Member States can change quickly, particularly in Germany. Confirm the current national law position with local counsel before relying on any exemption, and take professional advice for your circumstances.

Sources

Directive (EU), Council of the European Union, European Commission, French Commercial Code, German CSRD Transposition Act, Deutscher Bundestag, Deutsches Rechnungslegungs Standards Committee, Institut der Wirtschaftsprüfer, Wirtschaftsprüferkammer, Noerr, PwC Germany, Ebner Stolz, Italian Legislative Decree No. 125 of 2024, Linklaters, Herbert Smith Freehills Kramer, Weil Gotshal and Manges, Paul Hastings, White and Case, Commonwealth Climate and Law Initiative, KPMG International, Grant Thornton International, PwC, Rödl and Partner, Coolset, Councilfire

This article is intended for general professional information and does not constitute legal, financial, or investment advice.