CSRD for US Companies: Who Is in Scope After the 2026 Omnibus and How to Prepare

CSRD for US companies now turns on two tests set by the Omnibus I Directive (EU) 2026/470. A US group reports at group level only if it generates more than €450 million of net turnover in the EU in each of the last two consecutive financial years and has an EU subsidiary or branch with more than €200 million of turnover. Separately, any EU subsidiary with more than 1,000 employees and more than €450 million of turnover reports on its own.

This guide explains CSRD for US companies as the rules stand in October 2026. It covers the new thresholds, the dates that now apply to EU subsidiaries and to US parent groups, the simplified European Sustainability Reporting Standards (ESRS) adopted in July 2026, and a practical preparation plan for finance, legal and sustainability teams. If your company is a smaller supplier that only receives data requests from EU customers, our guide to ESG reporting for small and medium businesses is the better starting point.

What Changed in 2026

The Corporate Sustainability Reporting Directive (CSRD) amended the EU Accounting Directive in 2022 and phased in sustainability reporting by company size. In 2025 and 2026 the EU cut its scope back in two moves.

First, the "stop-the-clock" directive of April 2025 delayed reporting for companies that had not yet started. In the Commission's words, the Council "postponed by two years the entry into application of the CSRD requirements for large companies that have not yet started reporting, as well as listed SMEs." Under the original timetable set out in the Commission's CSRD FAQ, those large companies would have reported for financial years starting on or after 1 January 2025. The two-year delay moves that start to financial year 2027.

Second, the Omnibus I Directive, (EU) 2026/470, entered into force on 18 March 2026. Member States must transpose it into national law by 19 March 2027, according to the Commission's delegated act of 3 July 2026. It amended the Accounting Directive by reducing the number of companies in scope and simplifying the reporting framework, with the new requirements applying from financial years beginning on or after 1 January 2027.

The practical result for most US groups is a later start and a much smaller population of reporting entities. Groups that spent 2024 and 2025 preparing for a 2026 filing at an EU subsidiary should recheck those entities against the new thresholds before committing more budget.

CSRD for US Companies: The Two Scope Tests

A US company can be pulled into CSRD in two ways. The tests are independent, so a group can meet one, both or neither.

Test 1: an EU subsidiary that is large in its own right

An EU-incorporated company reports under the CSRD if, on its balance sheet dates, it exceeds net turnover of €450 million and an average of 1,000 employees during the financial year. The Commission's voluntary standard delegated act restates the test: undertakings "exceed a net turnover of EUR 450 000 000 and an average number of 1000 employees." Both criteria must be met. An EU parent of a large group can also be in scope on a consolidated basis, reporting in its consolidated management report.

For these EU entities, the revised ESRS apply from financial years beginning on or after 1 January 2027, with the first reports published in 2028.

Test 2: the US parent group (Article 40a)

The second route reaches the US parent itself. EFRAG's page on Article 40a sets out the post-Omnibus test. The non-EU group must "generate more than EUR 450 million net turnover in the EU during each of the last two consecutive financial years" and either have an EU branch generating more than €200 million or be the ultimate parent of EU subsidiaries generating more than €200 million.

EFRAG's July 2026 exposure draft materials describe the €200 million part as met by at least one EU subsidiary or branch with net turnover above €200 million in the preceding financial year, so test each entity on its own figures. When both parts are met, the EU subsidiary or branch publishes a sustainability report prepared at the level of the US parent's group. EFRAG states that reporting under ESRS-40a "will be mandatory for financial years starting on or after 1 January 2028," with the first statements published in 2029.

Before the Omnibus, the equivalent thresholds were €150 million of EU turnover and €40 million for the subsidiary or branch. Older guidance still quotes those figures, so check the date on anything your team relies on. Remember also that a UK subsidiary is outside the EU, so its turnover does not count toward the EU tests. Our guide to expanding to the UK covers the separate UK rules.

Worked Example: Three US Groups

The table applies both tests to three hypothetical US groups. Figures are for each of the last two financial years. Employees are averages for the EU entity named.

Group A is the only one with a reporting duty, and it arises at group level under ESRS-40a. Group B has large EU sales spread across smaller entities, so it falls outside both tests. Group C shows why both subsidiary criteria matter: its Dutch subsidiary passes the employee test and still falls outside scope on turnover.

Two cautions apply to any version of this exercise. Net turnover should come from the same accounts the auditors sign off, so align the EU turnover figure with your financial consolidation process. Intercompany sales also need a consistent rule, and the treatment used for transfer pricing is a sensible reference point.

What the Simplified Standards Mean for US Groups

On 3 July 2026 the Commission adopted two delegated acts. The first revises the ESRS. In the Commission's announcement, the revised standards "reduce the number of mandatory datapoints by over 60% and the total number of datapoints by over 70%." The measures apply once the European Parliament and Council scrutiny period of two months, which can be extended by two more, ends. The ESRS delegated act itself says companies must use the revised standards from financial year 2027 and may choose to use them for 2026.

The second act creates a voluntary standard for undertakings with up to 1,000 employees and sets a value chain cap. A company in CSRD scope cannot ask smaller companies in its value chain for more than that standard covers. For a US supplier with up to 1,000 employees, this limits the CSRD questionnaires EU customers can send from financial year 2027.

US parent groups in scope under Article 40a will use a separate set, ESRS-40a, formerly called N-ESRS. EFRAG says it "focuses on impacts only rather than impacts, risks and opportunities." The exposure draft is open for consultation from 23 July to 31 October 2026, so the final content is still pending as of October 2026.

Digital tagging is also still pending. EFRAG's digital reporting page states that "Digital tagging will not be mandatory for companies until the EC adopts the XBRL taxonomy."

Double Materiality for a US Finance Team

Entities reporting under the full ESRS assess double materiality. They look at impact materiality, meaning how the business affects people and the environment, and financial materiality, meaning how sustainability matters affect cash flows, costs and value. The revised standards add clearer instructions so that companies report only material information.

Financial materiality will feel familiar to anyone who has worked through materiality in a financial statement audit, although the sustainability version looks over a longer horizon. Impact materiality is new for most US finance teams and usually needs input from operations, HR and procurement. Groups reporting under ESRS-40a start from impacts, which makes that half of the exercise the priority for US parents.

A Seven-Step Plan

Step 1: Map entities and run both tests

List every EU subsidiary and branch with its turnover and average employees for the last two years. Your Form 5471 filings already identify the foreign corporations you own, which makes them a useful cross-check. Record which test each entity meets and the first financial year it applies to.

Step 2: Assign owners

Name one owner each in finance, legal, sustainability, HR and IT, with a steering check involving the CFO and general counsel. Keep the plan short: scope, materiality, gap analysis, data fixes, draft, assurance and sign-off.

Step 3: Run the materiality assessment

Use interviews and simple scoring to rank topics, and keep a short paper trail of how each decision was made. Compare existing disclosures with the relevant standard and list the gaps with owners and dates.

Step 4: Build the data map and controls

For each metric, record the source system, field, owner and refresh cycle. Energy and emissions data usually comes from facilities, workforce data from the HR system and supplier data from procurement. Apply the same discipline you would use for internal controls before a first audit: required fields, valid ranges, change logs and evidence that ties each number to its source.

Step 5: Prepare for limited assurance

The CSRD requires limited assurance over the sustainability statement. Agree early with the assurance provider what evidence they expect for each metric and policy statement. A document list modeled on a PBC request list, with one named owner per item, keeps that work organized.

Step 6: Draft and test tagging

Draft the sustainability section, define technical terms and pilot XBRL tagging on a few metrics once the taxonomy is adopted.

Step 7: Review after each cycle

After each filing, record what slowed the work and update the data map and controls before the next year begins.

Timeline for a US Group in Scope

National transposition can vary in detail, so confirm the rules in each Member State where you have an entity.

Frequently Asked Questions

Does CSRD apply to US companies with no EU subsidiary? A US company with only EU sales and no EU subsidiary or branch has no entity to carry the Article 40a report, so the group test cannot apply. It may still receive data requests from EU customers, which the value chain cap limits if it has up to 1,000 employees.

When do US parent companies first report under CSRD? For groups meeting the Article 40a test, reporting is mandatory for financial years starting on or after 1 January 2028, with the first reports published in 2029.

Do the old €150 million and €40 million thresholds still apply? No. The Omnibus raised them to €450 million of EU turnover and €200 million for the EU subsidiary or branch.

What standards will a US parent group use? ESRS-40a, a set developed by EFRAG for non-EU groups that focuses on impacts. Its public consultation runs until 31 October 2026.

Is assurance required? Yes. The CSRD requires limited assurance on the sustainability statement, so evidence trails and controls should be designed from the first reporting year.

Next Step

Madras Accountancy supports US companies and their CPA firms with accounting, consolidation, close and CFO-level finance work, including the entity mapping and data preparation that sustainability reporting depends on. To talk through your group's position, contact our team.