The European Financial Reporting Advisory Group (EFRAG) has provided new details on the forthcoming Non-EU European Sustainability Reporting Standards (N-ESRS), confirming that the EU's Omnibus reforms will significantly reduce the number of non-EU companies required to report under the Corporate Sustainability Reporting Directive (CSRD). According to EFRAG's preliminary estimates, the number of non-EU companies expected to be in scope has fallen from approximately 10,000 companies to around 1,200.

What Changed?

Prior to the Omnibus reforms, non-EU companies were generally within scope of CSRD if they:

• Generated more than €150 million in annual EU turnover; and

• Had an EU subsidiary or an EU branch generating more than €40 million in turnover.

Following the Omnibus reforms, non-EU companies will only be required to report if they:

• Generate more than €450 million in net turnover within the EU for two consecutive years; and

• Have an EU subsidiary or branch generating more than €200 million in turnover.

The revised thresholds represent one of the most significant scope reductions introduced through the Omnibus package and align with the broader EU effort to reduce regulatory burdens and focus sustainability reporting obligations on the largest companies.

N-ESRS Development Continues

Although the scope has been significantly narrowed, the EU has retained the requirement to develop dedicated sustainability reporting standards for non-EU companies. EFRAG has resumed work on the Non-EU ESRS (N-ESRS) and is expected to launch a public consultation in July 2026, with final technical advice anticipated in early 2027. The standards are expected to cover governance, strategy, policies, actions, metrics, and targets across a range of environmental, social, and governance topics.

Impact on International Companies

For multinational companies headquartered outside the EU, the Omnibus reforms significantly reduce the likelihood of falling within the CSRD's non-EU reporting regime. Many U.S., UK, Swiss, Japanese, and other international companies that would have been captured under the original thresholds are now expected to fall outside the scope of mandatory reporting. However, large multinational groups with substantial EU operations may still be required to comply and should continue monitoring developments surrounding the N-ESRS consultation and final standards.

Companies that remain in scope are expected to begin reporting on financial year 2028 information, with the first sustainability reports published in 2029. Organizations with significant EU revenue should use the coming years to assess whether they meet the revised thresholds, identify the relevant EU entity responsible for reporting, and prepare for the eventual publication of the N-ESRS framework.

Key Takeaway

The Omnibus reforms represent a substantial narrowing of CSRD's reach beyond Europe. While the original CSRD framework would have captured thousands of multinational companies globally, the revised thresholds focus reporting obligations on a much smaller group of the largest non-EU companies with significant EU operations. For many international businesses, the immediate compliance burden has been reduced, although companies with extensive European activities should continue monitoring developments as EFRAG finalizes the N-ESRS reporting framework.