Is CSRD Still Our Problem After the Omnibus? A Scope and Timing Check for UK Groups with EU Operations

If your EU subsidiary reported under CSRD for FY2024, the obligation was not simply "postponed". The 2025 stop-the-clock directive delayed later waves by two years, while Omnibus I (Directive (EU) 2026/470) narrowed the scope. For financial years starting on or after 1 January 2027, only undertakings or groups exceeding both EUR 450 million of net turnover and 1,000 employees on average remain in scope. Member States have until 19 March 2027 to transpose those changes, and some may release smaller wave-one reporters for FY2025 and FY2026.

Why a UK group still needs to read EU law

CSRD is an EU directive, not UK law, and this article says nothing about UK reporting rules, which the sources behind it do not cover. It matters to a UK group because CSRD obligations attach to EU entities and EU markets:

• an EU subsidiary that prepares a management report under its Member State's law (Article 19a of the Accounting Directive);
• an EU sub-holding that consolidates an EU sub-group (Article 29a);
• the group itself where it is an issuer with securities admitted to trading on an EU regulated market (the third subparagraph of Article 5(2) of the CSRD);
• from financial years starting on or after 1 January 2028, an EU subsidiary or branch that must publish a report at the level of a non-EU parent group (Article 40a).

Each of these entities applies the thresholds on its own basis, consolidated where it is a parent. The question is therefore entity by entity, year by year.

Stop-the-clock and Omnibus I are not the same change

Directive (EU) 2025/794 of 14 April 2025 replaced only the opening words of points (b) and (c) of Article 5(2): wave two now starts with financial years beginning on or after 1 January 2027 and wave three on or after 1 January 2028. Its recital 3 gives the reason: to spare undertakings due to report for 2025 and 2026 "unnecessary and avoidable costs" while simplification was under way. It left the thresholds alone.

Directive (EU) 2026/470, adopted on 24 February 2026 and published on 26 February 2026, did the structural work. It limited the old wave-one rule to three financial years from 1 January 2024 and replaced the wave-two criteria with the combined EUR 450 million and 1,000-employee test. Recital 31 states the consequence plainly: undertakings within the old point (a) but outside the new point (b) "will fall outside the scope" for financial years starting on or after 1 January 2027.

A worked check for an EU subsidiary of a UK group

Take a hypothetical Dutch subsidiary of a UK group. It is a large public-interest entity with 800 employees on average and EUR 380 million of net turnover. It reported for FY2024 under the 500-employee rule.

1. FY2024: in scope as a wave-one undertaking (more than 500 employees, PIE). Standards: ESRS set 1.
2. FY2025 and FY2026: still covered by the wave-one rule, which runs to financial years starting by 31 December 2026, unless the Netherlands used the option to exempt entities that do not exceed EUR 450 million of turnover or 1,000 employees. Our subsidiary does not exceed either limit, so the option would cover it. Whether the option was taken is a national-law point that the base does not cover.
3. FY2027 onwards: 380 is below 450 and 800 is below 1,000. It fails both limbs of the new test and is outside Articles 19a and 29a once the Omnibus changes are transposed.
4. FY2028 onwards: consider Article 40a separately. With EUR 380 million of turnover, the subsidiary exceeds the EUR 200 million subsidiary threshold. It would have to publish a group-level report only if the UK group's EU turnover exceeded EUR 450 million in each of the last two consecutive financial years.

If you stay in scope: three standards regimes in four years

• FY2024-FY2026: ESRS set 1 (Delegated Regulation (EU) 2023/2772). From financial years beginning on or after 1 January 2025, the quick fix in Delegated Regulation (EU) 2025/1416 extends phase-ins to all wave-one undertakings, including those above 750 employees.
• FY2026: optional early adoption. Delegated Regulation (EU) 2026/1563, Article 2, allows ESRS set 1 as amended, the new simplified ESRS, or set 1 with eight named reliefs, such as the "top-down" materiality approach. You must state which version you applied.
• FY2027 onwards: the simplified ESRS, in force from 10 November 2026 and applicable to financial years beginning on or after 1 January 2027.

Group-structure options worth knowing

Two Omnibus I additions to Article 29a of the Accounting Directive are relevant to acquisitive UK groups with an EU sub-holding in scope. First, where the group changes during the year through an acquisition or merger, the parent may leave the acquired undertakings out of that year's consolidated sustainability reporting. Likewise, it may leave out a subsidiary that leaves the group during the year. In both cases it must still flag any significant event that affects the group's impacts, risks or opportunities (Article 29a(4a)). Second, a parent that is a financial holding undertaking whose subsidiaries' business models and operations are independent of one another may choose not to include consolidated sustainability information (Article 29a(7a)).

Omnibus I also removes listed SMEs from the regime altogether, together with the two-year opt-out they previously had (recitals 15 and 16). A small or medium-sized EU entity of your group with securities on an EU regulated market is therefore no longer a reporter in its own right under the amended directive.

If you fall out: what follows you

An EU entity below the thresholds can still receive data requests from in-scope customers. If it averaged no more than 1,000 employees in the preceding financial year, it is a protected undertaking. It may decline information beyond the voluntary standard, and contract terms that demand more are not binding (Article 19a(3) of the Accounting Directive). The cap itself, in Article 3 of Delegated Regulation (EU) 2026/1560, applies from financial years beginning on or after 1 January 2027. The same regulation provides a voluntary standard that out-of-scope undertakings may use.

Frequent misreadings

• "CSRD has been delayed for everyone." No: wave one was not moved by stop-the-clock. FY2024 reports were due, and FY2025 and FY2026 remain due unless a national exemption applies.
• "We only need to exceed one threshold." No: the 2027 test is cumulative. The optional FY2025-2026 exemption is the mirror image, covering entities that do not exceed either limit.
• "Leaving scope ends all EU sustainability work." Not necessarily: value-chain requests and, from 2028, Article 40a can still reach your EU entities.
• "The UK position is the same." The base contains EU texts only and does not address UK law.

To check a specific entity, ask the CSRD & ESRS knowledge base, for instance: "Did the two-year stop-the-clock postponement change which undertakings are in scope of CSRD, or only when they start reporting?" Answers cite the consolidated CSRD and the stop-the-clock directive on EUR-Lex.

This article summarises EU texts as indexed on 5 October 2026 and is not legal advice. Your entities' figures and each Member State's transposition decide the outcome.