CSRD Update: Europe Narrows the Field, but Human Capital Reporting Still Matters
Here’s an update on the status of the EU Corporate Sustainability Reporting Directive, whose scope was narrowed after significant pushback from business. The CSRD will continue to affect a lot of companies because the world’s largest firms will likely be asking for more disclosures from their US suppliers, including detailed human capital information. Click here to subscribe to the ESM weekly e-newsletter.
The EU has significantly narrowed the Corporate Sustainability Reporting Directive through its Omnibus I changes, but for large companies still in scope, workforce disclosure remains one of the most consequential parts of the regime. The biggest shift: the bar has moved to companies with more than 1,000 employees and more than €450 million ($525 million) in net turnover.
This is estimated to amount to about 6,000 of the EU’s largest companies. Over 70% are estimated to have subsidiaries or otherwise do business in the US, amounting to over 4,200 of the largest companies in the US likely to be asking for more information on worker practices to ensure they comply with the law, which carries effective penalties for non-compliance to be determined by each country. EU companies subject to the law have to report on global operations. About 800 US companies do enough business in the EU to require compliance. Under Omnibus 1, US companies subject to the law in Europe only have to provide US workforce detail if they are material to EU stakeholders and operations.
According to an article by Sarah Hellewell, Senior Professional Support Lawyer at DLA Piper, the main CSRD story is no longer about expansion but retrenchment. The EU Council approved the Omnibus I simplification package on Feb. 24, 2026 and entered into force on March 18, 2026. As Hellewell notes, Omnibus I now limits mandatory CSRD reporting, from its revised application date, to undertakings, and parent undertakings on a consolidated basis, that exceed both €450 million in net turnover and an average of more than 1,000 employees during the financial year. Just as important, the prior pathway that would have brought many listed SMEs into scope has been removed. In other words, for many mid-sized businesses that had been preparing for CSRD, the immediate burden has been pushed back or lifted altogether.
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Smaller companies are not off the hook, as many may have to provide information to the large multinationals they do business with, even US companies. That said, the practical result is a much smaller reporting population. Timing is now split into two tracks. The first-wave companies already caught by the original regime, broadly public-interest entities with more than 500 employees, began with financial years starting on or after Jan. 1, 2024, meaning calendar-year companies started reporting in 2025. For the broader second wave, however, the April 2025 Stop-the-Clock directive delayed reporting by two years, and Omnibus I now points future mandatory reporting to financial years beginning on or after Jan. 1, 2027, for companies above the new thresholds. Member states have until March 19, 2027 to transpose the CSRD amendments into their national laws
What will those companies have to report on the human capital side? The core workforce disclosures still sit in ESRS (European Sustainability Reporting Standards) S1, Own Workforce, and they are substantial. The major metrics include total employee headcount with gender and country breakdowns; non-employee workforce figures; the percentage of employees covered by collective bargaining agreements; gender distribution in top management and age distribution of employees; whether employees are paid an adequate wage; social protection coverage; the percentage of employees with disabilities; participation in performance and career reviews; average training hours; health and safety coverage, injuries, ill health and fatalities; family-related leave; the gender pay gap; and the ratio between the pay of the highest-paid individual and median employee pay
That is why this is still a major people-management issue even after the rollback. Hellewell notes that employers should keep pressure-testing workforce data on headcount, turnover, training, pay, diversity, health and safety, engagement and representation structures. Even companies that fall out of mandatory scope may still face value-chain and customer demands for this information from larger companies that remain covered. So while CSRD now reaches fewer companies, it still signals where Europe expects large employers to prove they can manage people with the same rigor they apply to finance.
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