Insights
This is the question we are asked more than any other, and for most of the last two years the honest answer was that it depended on rules that kept changing. That has now settled. The European Union’s Omnibus simplification package has been finalised, and the scope of the Corporate Sustainability Reporting Directive is far narrower than it was when the directive was first adopted. A large number of organisations that built compliance programmes on the original thresholds are no longer in scope at all.
By Christopher Fagan
Here is where things stand, and how to work out where your group falls.
Under the finalised Omnibus position, an undertaking is caught by CSRD only if it exceeds both of the following: more than 1,000 employees on average over the financial year, and more than €450 million in net turnover. Both tests must be met. This is a very significant increase from the original directive, which brought in companies with as few as 250 employees.
The practical effect is that CSRD is now aimed at genuinely large enterprises. If your headcount is comfortably below one thousand, you are almost certainly outside the directive regardless of turnover, and vice versa.
The timeline has also moved. In broad terms:
Plans for sector specific reporting standards have been cancelled, and there are protections limiting how much information the largest companies can demand from smaller companies in their value chain.
This is the route that catches many UK headquartered groups by surprise. A parent established outside the European Union is caught if it generates more than €450 million of turnover inside the EU and has an EU subsidiary or branch above a defined size threshold, measured across two consecutive financial years. If that parent publishes a consolidated report under the European standards, its individual EU subsidiaries are generally exempt from reporting separately.
So a UK group with substantial European revenue can be pulled into CSRD through the back door even though its parent sits outside the EU. This needs testing specifically rather than assuming that being headquartered in Britain settles the matter.
Even with clearer rules, the answer for a real group is rarely a single number. Work through it deliberately.
Many organisations have. Two things are worth doing anyway. First, document the reasoning and the figures the conclusion rests on, and revisit it each year, because growth or an acquisition can bring you back in. Second, consider whether voluntary reporting still makes commercial sense. Investors, lenders and large customers increasingly ask for sustainability data regardless of whether the law compels it, and a buyer conducting due diligence will ask.
Start now, even though 2028 sounds distant. The work that takes longest, mapping where your data lives, putting controls around it so it can be assured, and running a proper double materiality assessment, takes the better part of two years for a large group. The reporting deadline is fixed. The preparation time is not.
The rules are clearer than they were, and the pool of companies in scope is much smaller. But the answer for your specific group still depends on your entity structure, your numbers and your European footprint. If someone gives you a confident one line answer without looking at those, be careful.
We produce written scoping assessments that set out the position entity by entity, with the reasoning shown, so you have something defensible to put in front of a board or an auditor. See ESG and compliance or get in touch.
If any of this is live for you right now, the senior people who wrote it are the people you would work with.