CSRD after the Omnibus: what fashion brands must report in 2026, and how AI helps
The Omnibus I deal cut the CSRD's scope sharply. Which fashion companies still report, when, what the value chain cap means for suppliers, and where AI can make reporting less painful.
KEY TAKEAWAYS Summary by the editors
- After Omnibus I, the CSRD applies to EU undertakings with more than 1,000 employees and more than 450 million euros in net annual turnover, with both conditions required.
- The revised scope applies to financial years starting on or after 1 January 2027, Wave 2 companies' first reports are deferred to 2028 covering financial year 2027, and listed SMEs are fully exempt.
- Non-EU groups are in scope if they generate more than 450 million euros in EU turnover in each of the last two years and have an EU subsidiary or branch with more than 200 million euros in turnover.
- Value chain partners with 1,000 or fewer employees are protected from information requests beyond the voluntary standard, and reporters may rely on their self-declarations.
- AI helps most with collecting, mapping and checking data against ESRS datapoints, but disclosures still need human judgement on materiality and limited assurance.
After the EU's Omnibus I simplification, far fewer fashion companies must report under the Corporate Sustainability Reporting Directive (CSRD): EU companies are in scope only if they have more than 1,000 employees and more than 450 million euros in turnover. For those still in scope, the revised rules apply from financial years starting in 2027, while first-wave reporters continue. AI can reduce the manual work of gathering and checking data, but it does not replace judgement on materiality or the need for assurance.
What did the Omnibus change in the CSRD?
The Commission presented the Omnibus I package on 26 February 2025. According to Accountancy Europe, the European Parliament and Council reached final agreement on the CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD) on 9 December 2025, and Morrison Foerster reports that Parliament approved the compromise text on 16 December 2025. The directive enters into force 20 days after publication in the Official Journal, and Member States then have 12 months to transpose it.
| Topic | Revised rule | Source |
|---|---|---|
| EU scope | More than 1,000 employees and more than 450 million euros net turnover | Accountancy Europe |
| Non-EU groups | More than 450 million euros EU turnover in each of the last two years, plus an EU subsidiary or branch above 200 million euros | Accountancy Europe |
| Listed SMEs | Fully exempt | Accountancy Europe |
| Timing | Revised scope applies to financial years from 1 January 2027; Wave 2 first reports in 2028 for financial year 2027; non-EU reporting from 2029 for financial year 2028 | Accountancy Europe |
| Value chain cap | No requests beyond the voluntary standard to partners with 1,000 or fewer employees | Accountancy Europe, Morrison Foerster |
| Assurance | Limited assurance standard by 1 July 2027; move to reasonable assurance removed | Accountancy Europe |
| Sector standards | Commission power to adopt mandatory sector-specific ESRS removed | Morrison Foerster |
Accountancy Europe also notes that Wave 1 companies with 500 to 1,000 employees no longer have to comply from 2027, and Morrison Foerster reports that Member States may offer transitional relief to companies that started reporting for financial year 2024 but fall out of the new scope.
Which fashion companies still have to report?
The thresholds remove most mid-sized fashion brands, wholesalers and manufacturers from mandatory reporting. Large groups, major retailers and the biggest brands remain. Non-EU fashion groups with substantial European sales can be caught through the EU turnover test, with reporting from 2029 for financial year 2028.
Falling out of scope does not mean the data disappears from the agenda. Large customers still need information for their own reports, banks and investors continue to ask, and other rules, from the ESPR to the EU Forced Labour Regulation, rely on similar supply chain data.
What does the value chain cap mean for suppliers?
Companies in scope may not request information beyond the voluntary standard for SMEs from protected undertakings, defined as partners averaging 1,000 or fewer employees. According to Morrison Foerster, protected undertakings have a statutory right to refuse additional requests, and reporters that respect the cap are deemed to satisfy the value chain reporting obligation, including through estimates. Accountancy Europe states that the delegated act for the voluntary SME standard is due by 19 July 2026.
For fashion, where most suppliers are small or medium-sized, this should shorten questionnaires and push brands to rely more on documented estimates and on data that suppliers already hold.
It also changes the tone of supplier engagement. Instead of sending every factory a long questionnaire, in-scope brands are likely to concentrate detailed requests on their largest partners above the threshold, accept standardised self-declarations from smaller ones, and fill remaining gaps with transparent estimates. Suppliers, in turn, gain a clearer basis for declining requests that go beyond the voluntary standard.
What data foundations does a fashion brand need?
Whatever the reporting obligation, the underlying data problems in fashion are similar: energy and waste data spread across stores, offices and warehouses; workforce data in several HR systems; and supply chain data held partly by agents and suppliers. A single register of entities, sites and suppliers, with clear owners for each metric, is the precondition for any useful automation. AI tools work best when they are connected to this register rather than to scattered spreadsheets.
Where does AI help with CSRD reporting?
- Datapoint mapping: linking internal metrics, policies and documents to the relevant ESRS disclosure requirements and highlighting gaps.
- Document extraction: pulling energy, waste, workforce and supplier figures from invoices, utility bills, HR exports and supplier reports.
- Estimation support: classifying spend for scope 3 estimates and documenting the method, which matters more under the value chain cap.
- Consistency checks: comparing figures across years, entities and sections and flagging anomalies before the auditor does.
- Drafting: producing first drafts of narrative disclosures from approved data and policies, for human editing.
The limits are clear. Normative warns that AI cannot create credible data where none has been reported, and that unverified figures expose companies to audit findings and reputational damage. Double materiality judgements, target setting and transition plans need accountable people, not generated text.
How should a fashion brand prepare for 2026 and 2027?
- Confirm whether your group meets the new thresholds, including the non-EU test, and document the result.
- If you remain in scope, revisit your double materiality assessment against the simplified ESRS once published.
- Redesign supplier data requests to respect the value chain cap and rely on the voluntary standard.
- Introduce AI for data collection and checks in one area, such as energy or scope 3 spend, with full audit trails.
- If you fall out of scope, decide which voluntary disclosures your customers and lenders still expect.
What about the CSDDD?
The due diligence directive was narrowed too. Morrison Foerster reports a scope of companies with more than 5,000 employees and more than 1.5 billion euros turnover, transposition by 26 July 2028 and application from 26 July 2029, with the climate transition plan obligation removed from the CSDDD. For most fashion companies the more immediate due diligence pressure now comes from customers, national laws and product-level rules.
Frequently asked questions
Does the CSRD still apply to fashion brands after the Omnibus?
Yes, but only to large ones. EU companies must have more than 1,000 employees and more than 450 million euros net turnover. Non-EU groups are covered if they exceed 450 million euros of EU turnover and have a large EU subsidiary or branch.
When do Wave 2 companies have to publish their first CSRD report?
According to Accountancy Europe, Wave 2 companies that remain in scope publish their first report in 2028, covering financial year 2027. Non-EU groups report from 2029 for financial year 2028.
Can I still send ESG questionnaires to my suppliers?
You can, but in-scope companies may not request information beyond the voluntary standard from partners with 1,000 or fewer employees, and those partners may refuse extra requests. Reporters may rely on suppliers' self-declarations unless they are manifestly incorrect.
Can AI write my sustainability report?
AI can collect and check data and draft narrative sections, but materiality decisions, targets and final disclosures need accountable human review. Every figure should be traceable to a source for limited assurance.
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