CSDDD Omnibus Update Explained: Scope, Thresholds, and What’s Changing

As the European Union refines its sustainability framework, the proposed “Omnibus” revisions to the Corporate Sustainability Due Diligence Directive (CSDDD) signal a clear shift in policy direction. The goal is straightforward: simplify the regulatory landscape and reduce the compliance burden—primarily by narrowing the scope of companies affected.

A Significant Narrowing of Scope

Under the Omnibus discussions led by the European Commission, the scope of the CSDDD is expected to tighten considerably. The proposal raises the threshold so that only the very largest companies fall within its remit.

The revised criteria would include:

• More than 5,000 employees
• €1.5 billion in net global turnover

This marks a substantial increase compared to the original directive and reflects a deliberate move to focus enforcement on companies with the greatest economic influence and systemic impact.

Not the Original CSDDD Framework

It’s important to distinguish these proposals from the directive as originally adopted.

The initial thresholds were significantly lower:

• 1,000+ employees
• €450 million in turnover

The Omnibus revision therefore represents a major scaling back of scope, not a minor adjustment. Many companies that would have previously been covered may now fall outside the directive.

How Non-EU Companies Are Assessed

A key feature of the CSDDD—retained in the Omnibus proposal—is its extraterritorial reach. However, the way non-EU companies are evaluated is often misunderstood.

For companies headquartered outside the EU, the relevant metric is:

• Turnover generated within the EU, not global turnover

Under the proposed revision:

• Non-EU companies must generate at least €1.5 billion inside the EU to be in scope

This leads to an important practical outcome:

• A non-EU company with €5 billion in global turnover but only €1 billion in EU revenue would not be covered

This approach is consistent with how the EU applies jurisdiction—regulating economic activity within its market rather than attempting to govern global operations directly.

EU vs Non-EU: A Structural Difference

The directive creates a distinction in how companies are assessed:

• EU companies → evaluated based on net global turnover
• Non-EU companies → evaluated based on EU-generated turnover only

At first glance, this may seem uneven. Large non-EU companies could fall outside the scope even if their global footprint is massive. However, this is not necessarily a stricter stance toward EU companies—it reflects legal and jurisdictional limits on the EU’s ability to regulate entities beyond its borders.

Policy Intent: Reduce Burden, Focus Impact

The Omnibus revision signals a broader policy trend:

• Reduce compliance complexity
• Limit obligations to the largest, most impactful companies
• Maintain core sustainability objectives while easing administrative pressure

In effect, the EU is prioritizing depth of regulation over breadth.

Status: Still Evolving

It’s crucial to note that these changes are not yet final. The Omnibus package is part of an ongoing legislative process involving:

• The European Parliament
• The Council of the European Union

Negotiations between these institutions could still reshape the final thresholds and scope. Companies should therefore treat the current proposal as indicative—not definitive.

Key Takeaway

The Omnibus revisions to the CSDDD represent a meaningful recalibration:

• Higher thresholds significantly narrow the scope
• Non-EU companies are assessed based on EU turnover, not global revenue
• Differences in treatment reflect jurisdictional realities rather than regulatory bias

For businesses, the message is clear: while fewer companies may fall within scope, those that do will face concentrated expectations—and should prepare accordingly.