Have your say on ESRS-40a for non-EU undertakings with significant EU market activity
On July 23 EFRAG launched a 100-day public consultation on the Exposure Draft of the European Sustainability Reporting Standards (ESRS-40a ED) for certain non-EU undertakings, developed under Article 40a of the Accounting Directive.
All interested stakeholders are invited, both within and outside the EU, to share their views before 31 October, including on the practical implementation challenges and the relevance of the resulting disclosures.
The objective of the ESRS-40a sustainability report, taken as whole, is to present fairly all the parent undertaking or group’s material sustainability-related impacts, and how the parent undertaking or group manages them.
The aim is to ensure that there is a level playing field for undertakings operating in the EU market, as well as to ensure transparency on impacts on people and the environment of non-EU undertakings with relevant EU activities.
ESRS-40a standards were previously denominated in EFRAG preliminary documents as Non-EU ESRS (N-ESRS) or ESRS for third countries (ESRS-TC). By naming the standard ESRS‑40a, EFRAG makes the legal anchor visible and unambiguous. This reinforces that it is not a separate framework, but a CSRD‑mandated ESRS standard.
Click here to access the standard: ESRS-40a_Exposure_Draft.pdf
Click here to submit your feedback: EFRAG Launches Public Consultation on the ESRS-40a Exposure Draft for Certain Non-EU Undertakings | EFRAG
Who will be in-scope?
Non‑EU groups with >€450M EU turnover and at least one EU subsidiary or branch with >€200M EU turnover (no employee threshold) will need to publish an ESRS-40a sustainability report targeting financial years starting on or after January 1, 2028.
Around 1,200 companies are expected to fall in scope, including 350–450 US groups and 150–200 UK groups.
ESRS-40a is an impact‑only standard
Disclosures on risks, opportunities, financial effects and resilience are removed, because Article 40a legally limits the EU to requiring transparency on impacts on people and the environment (IFRS S1/S2 cover financial risks). However, companies may still include financial information when needed to explain. This is the core design choice: ESRS-40a = ESRS minus the financial‑materiality.
12 ESRS‑aligned standards
The standard requires disclosures across 12 ESRS‑aligned standards, covering strategy, governance, policies, targets, due diligence, impacts, actions and metrics.
Groups can choose between three reporting perimeters:
- Global (default) — report global impacts for all topics
- Mixed — EU‑related impacts only (but climate-related impacts are always global),
- Full ESRS — voluntary, enabling subsidiary exemption if the non‑EU parent applies full ESRS
When assessing EU-related impacts, the following are examples of factors that the undertaking may consider:
- (a) existence of a separate business segment dedicated to serving the EU market;
- (b) products or services specifically designed for the EU-market;
- (c) separate management of EU-related impacts; or
- (d) value chains dedicated to products and services that were or can be reasonably assumed to be sold or provided in the EU market.
Timeline
Exposure Draft mid‑July 2026, consultation until October, technical advice in January 2027, adoption mid‑2027, first reports published in 2029 (on FY 2028).
ESRS-40a will reshape sustainability reporting for non‑EU groups with significant activities in the EU. Impact transparency becomes mandatory, global climate data collection will be essential, and early preparation is key.
