Post-Omnibus CSRD for textile brands: double threshold, upstream cascade and revised ESRS

From NFRD 2014/95 to CSRD 2022/2464 and the Omnibus 2026/470

Directive 2013/34/EU established the primary obligations regarding annual financial statements, constituting the basis on which Directive 2014/95/EU (NFRD) was articulated for the disclosure of non-financial information. The regulatory evolution culminated in Directive (EU) 2022/2464 (CSRD), a legislative instrument designed to correct the deficiencies of the NFRD, such as the omission of material information on greenhouse gas emissions and biodiversity factors, as well as the limited comparability and reliability of published data.

The original design of the CSRD drastically expanded the perimeter of obligated parties, incorporating large companies and listed SMEs, which generated immediate operational tensions in the European industrial fabric. The European Commission identified this framework as a substantial source of regulatory burden that threatened the competitiveness of the internal market. In response, the Commission Communication of 11 February 2025, titled «A simpler and faster Europe», established a programme of legislative intervention that materialised in Directive (EU) 2026/470, known as the Omnibus Regulation.

The rationalisation introduced redirects the primary compliance burden towards corporations with greater capacity to absorb costs. The restriction of the scope of application ensures that mandatory reporting falls exclusively on the largest companies, groups and issuers. This reduction of the primary perimeter does not imply disconnection: the architecture itself establishes due diligence obligations across the value chain, triggering a cascade effect.

Binding framework today: Omnibus, ESRS in force and QuickFix 2025/1416

The central modification resides in the Omnibus Directive (EU) 2026/470, which alters Article 19a(1) of Directive 2013/34/EU, redefining the threshold for subjection to the mandatory regime. The consolidated wording requires reporting from «companies that, on the balance sheet date, have generated a net turnover exceeding 450 000 000 EUR and exceed an average number of 1 000 employees during the financial year».

In parallel, the content of the report remains determined by the first set of ESRS, adopted via Delegated Regulation (EU) 2023/2772. These standards, divided into cross-cutting standards (ESRS 1 and ESRS 2) and topical standards (ESRS E1-E5, S1-S4, G1), detail the disclosure requirements under the double materiality principle. The complexity required the publication of Corrigendum 2023/2772, which replaced terms such as «potential financial effects» with «anticipated financial effects».

To manage the transition, the Commission enacted Delegated Regulation (EU) 2025/1416 (QuickFix). This instrument amends Delegated Regulation 2023/2772 by postponing the date of application of complex disclosure requirements. The framework is completed with EFRAG's implementation guidance: IG1 (Materiality), IG2 (Value Chain) and IG3 (List of Datapoints).

Double cumulative threshold: why AND and not OR changes the European textile map

The modification introduced by the Omnibus materialises a structural transformation of the universe of obligated companies. The replacement of the previous criterion with a clause requiring simultaneous compliance with net turnover AND the average number of employees completely redefines the European map. The cumulative conjunction, technically expressed with the conjunction «and», excludes a significant volume of entities that previously fell within scope by meeting only one of the criteria.

To illustrate the quantitative impact, three scenarios common in the textile sector can be analysed. A company with 800 employees and 600 000 000 EUR in turnover is excluded from the primary mandatory perimeter because it does not reach the headcount threshold. Another with 1 200 employees and 350 000 000 EUR is also excluded because it does not reach the turnover threshold. Only a company with 1 200 employees and 500 000 000 EUR is obligated.

The sectoral textile impact is substantial. Most European textile brands of relevant size manage headcounts between 500-1,500 employees with turnover of 300-600 million. Under the old wording, a majority proportion fell within the perimeter. The new cumulative filter excludes a very high percentage, placing them under a regime of indirect contractual obligation via the upstream cascade.

Operational timeline: application 1 jan 2027 + revised ESRS sep 2026

The first formal milestone is marked by the publication of the Omnibus Regulation in the OJEU on 26 February 2026, triggering the timelines for entry into force 20 days later. The second decisive milestone is the date of effective application: 1 January 2027 as the start of the general period during which companies exceeding the cumulative threshold must submit their first sustainability report. Member States may exempt companies under the old thresholds from compliance for financial years between 2025 and 2026.

The third milestone binds the European Commission with a mandatory mandate. The Omnibus Regulation requires the Commission to adopt, by delegated act, a substantial revision of the first set of ESRS before September 2026. This reform will be aimed at removing the datapoints that practice has shown to be least important, simplifying the methodology of the double materiality assessment, and prioritising the quality of quantitative indicators.

The transitional regime adds chronological complexity. Companies that had already begun their reporting cycles may choose to suspend pending external assurance, relying on the new supervening exemption. Border companies, whose turnover or headcount fluctuates annually, must analyse national transposition legislation to determine whether exiting the threshold requires two consecutive financial years below it before taking effect.

How post-Omnibus CSRD intersects with DPP ESPR, textile EPR, upstream CSDDD and ECGT

The intersection with the Digital Product Passport manifests primarily in ESRS E5 on resource use and the circular economy. The datapoints required by JRC 145830 for the textile DPP (fibre composition, recycled fibre, tested durability and end-of-life routes) feed directly into the quantitative disclosures of ESRS E5.

The textile EPR regime under Directive 2025/1892 contributes additional operational evidence. The quantities by weight of textile products placed on the market, the reuse rates managed by the SCRAP and the penalties arising from fast fashion practices constitute auditable quantitative information that nourishes ESRS E5.

CSDDD Directive (EU) 2024/1760, also amended by the Omnibus Regulation, articulates the main upstream cascade mechanism. The Omnibus Directive raises the thresholds applicable to value chain due diligence, setting them at companies exceeding 5 000 employees and 1 500 000 000 EUR in turnover, and postpones the start of effective application of the requirement in the upstream chain to 26 July 2029.

Finally, the ECGT 2024/825 prohibits environmental claims without documentary support, anchoring any public statement about sustainability to the traceable evidence produced by the combination of DPP, EPR, CSDDD and CSRD.

Operational implications by size: large obligated brand, mid-sized in the cascade and small one outside

The brand within the Omnibus threshold (>1,000 employees AND >€450M) assumes full responsibility for the CSRD. This entity must carry out an exhaustive Double Materiality Assessment (DMA), documenting the processes of identifying impacts, risks and opportunities in accordance with ESRS 1 and ESRS 2 IRO-1. It requires implementing internal controls over sustainability information equivalent to those applied to financial information.

For the brand outside the Omnibus threshold operating as a B2B supplier (mid-sized in the cascade), the landscape is defined by upstream chain pressures. Although exempt from auditing and filing an individual sustainability report, this entity faces data requests issued by its clients subject to the CSRD and the CSDDD. The Omnibus rules introduce a protection mechanism called the value chain cap, whereby reporting companies cannot demand from protected companies information that exceeds that specified in VSME.

The smaller textile company, focused on direct B2C models and disconnected from the value chain of large corporations, experiences an almost total regulatory exemption. Its involvement is voluntary and driven by financing and capital access dynamics.

8 edge cases: post-Omnibus CSRD reporting border scenarios

1. Company at mid-cycle threshold border: the double threshold assessment is based on the data at the balance sheet date. The rules of Directive 2013/34/EU require the thresholds to be exceeded or ceased to be exceeded for two consecutive financial years for the change of category to take effect.

2. Non-EU parent subsidiary: EU branches of a parent company from a third country are subject to the CSRD under Article 40a. The Omnibus raises the threshold to 450 000 000 EUR for the non-EU parent in each of the last two financial years, while the EU subsidiary must exceed 200 000 000 EUR.

3. JV with a [CSRD](/recursos/glosario/csrd)-obligated partner: ESRS 1 stipulates that GHG emissions data from joint ventures must be included depending on the degree of operational control (ESRS E1 paragraph 46).

4. Private label of an obligated retailer: the manufacture of private labels subjects the manufacturer to maximum upstream cascade pressure. It may rely on the VSME cap to reject requests that exceed the voluntary standard.

5. Corporate spin-off: the thresholds will be assessed on the new independent consolidated perimeters. If, after the spin-off, no new company reaches the consolidated thresholds, both are exempt.

6. Merger that crosses the threshold: Article 29a(4a) grants a transitional prerogative to the parent company not to include information on the acquired companies for that financial year.

7. Intermediate holding: Article 29a(7a) determines that financial holding parent companies with independent subsidiaries may choose not to include the consolidated report.

8. EU+non-EU group: the threshold analysis must be carried out on a worldwide consolidated basis (Art. 29a), not restricted to the territory of the Union.

5 operational decisions for the next 12 months

1. Double threshold verification: senior management must immediately carry out a scoping audit using the consolidated data of the last closed financial year. This determination requires a legal opinion certifying the entity's position under the new wording.

2. Map of obligated B2B clients: the textile brand with sourcing operations for third parties must trace the cascade exposure matrix. The commercial department will assess what percentage of turnover comes from primary obligated corporate clients.

3. [VSME](/recursos/glosario/vsme) 2025 implementation: faced with confirmed exposure in the value chain, the entity outside the primary threshold must undertake parameterisation in accordance with Recommendation (EU) 2025/1710. Early assimilation of the VSME modules ensures the structured supply of metrics to large reporting companies.

4. Monitoring revised [ESRS](/recursos/glosario/esrs) sep 2026: brands within the Omnibus threshold must set up an interdepartmental working group to monitor the publication of the delegated act that the Commission will adopt in September 2026.

5. [DPP](/recursos/glosario/dpp)+EPR→[ESRS](/recursos/glosario/esrs) E5 reconciliation: the sustainability department must structure data sources for circular economy reporting by unifying the related regulatory initiatives. The metrics required for ESRS E5 on the use of secondary renewable resources must be extracted directly from the DPP and EPR repositories.