ESRS for Certain Non-EU Undertakings in Accordance with Article 40a of the Accounting Directive
Level playing field and transparency on impacts of largest non-EU groups active in the EU
The Corporate Sustainability Reporting Directive (CSRD) introduces sustainability reporting requirements for certain non-EU undertakings with significant activities in the European Union. Under Article 40a of the Accounting Directive, the European Commission (EC) is required to adopt dedicated European Sustainability Reporting Standards (ESRS) for these undertakings.
Following a request from the European Commission, EFRAG developed the ESRS for certain non-EU Undertakings (ESRS-40a) Exposure Draft. ESRS-40a is now open for public consultation. The feedback received will contribute to the finalisation of EFRAG's technical advice to the European Commission. Reporting in accordance with ESRS-40a will be mandatory for financial years starting on or after 1 January 2028.
ESRS-40a standards were previously denominated in EFRAG preliminary documents as Non-EU ESRS (N-ESRS) or ESRS for Third-Countries (ESRS-TC).
Objective of ESRS-40a reporting:Ensure a level playing field for EU market operators and transparency regarding how non-EU undertakings with significant EU activities impact people and the environment. |
Public Consultation
Consultation period: 23 July – 31 October 2026 (100 days).
Participate in the consultation by:
- Reviewing the Exposure Draft and supporting documents
Completing the online questionnaire and providing technical comments and recommendations
📄 ESRS-40a Exposure Draft
➡️ Submit your feedback via the online questionnaire
Supporting documents
|
Key consultation topics
EFRAG seeks feedback on:
Drafting approach: Deletions and additions compared with ESRS, in accordance with the CSRD. Do you agree on how the removal of risks, opportunities, resilience and dependencies has been processed by EFRAG in the Exposure Draft?
References to EU legislation: How would the reporting companies approach the use of concepts and terms based on EU law and regulation, when part of their operations are outside the scope of them?
Option to limit the reporting to EU-related impacts only, instead of reporting on global impacts (mixed approach): Is the proposed global/EU-related reporting approach workable and does it result in relevant information?
Interoperability: How can ESRS-40a work seamlessly with jurisdictional reporting standards based on IFRS Sustainability Disclosure Standards?
Companies in the scope of Article 40a of the Accounting Directive
Following the Omnibus amendments, Article 40a applies to non-EU undertakings that:
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 EUR 200 million, or
are the ultimate parent of EU subsidiaries generating more than EUR 200 million.
Cost-Benefit Analysis
EFRAG will launch a Cost-Benefit Analysis in mid-August 2026 and encourages stakeholders to share their views on the expected costs and benefits of the proposed requirements set out in the Exposure Draft.
Timeline
Education materials
To support stakeholders during the consultation, EFRAG released education materials, based on the content of the launch webinar event that took place on 22 July 2026, presenting the objectives of the consultation and the key proposed requirements.
Frequently Asked Questions
Who will be required to report?
Who will be required to report?
Certain third-country undertakings meeting the thresholds established under Article 40a of the Accounting Directive.
When will reporting start?
When will reporting start?
The first sustainability statements are expected to relate to financial year 2028 and be published in 2029.
Why requiring this reporting under ESRS-40a?
Why requiring this reporting under ESRS-40a?
Subsidiaries or branches in the EU when certain thresholds are met, are mandated to publish and make accessible a ESRS-40a sustainability report at the level of their third-country parent company’s group. The objective of ESRS-40A reporting is to ensure that there is a level playing field for undertakings operating in the EU market, as well as to ensure that non-EU undertakings with relevant EU activities are accountable for their impacts on people and the environment.
ESRS-40a sustainability report covers all topics in the CSRD, not only climate. Scope of reporting is generally global, but reporting groups may choose to limit the reported information to EU-related impacts for topics other than climate.
How was ESRS-40a developed?
How was ESRS-40a developed?
The ESRS-40a have been specifically designed for third-country undertakings. The ESRS-40a ED:
builds on the existing ESRS;
retains the same overall architecture (12 standards);
focuses on impacts only rather than impacts, risks and opportunities and removes disclsoures on risks, opportunities, resilience and dependencies;
introduces targeted additions reflecting Article 40a requirements, including the mixed approach.
What are the legal requirements?
What are the legal requirements?
For questions regarding whether an undertaking falls within the scope of Article 40a of the Accounting Directive or for broader questions related to the CSRD and the Accounting Directive, please consult the European Commission's FAQ’s.
Stay informed
Interested in the development of ESRS-40a?
Follow the ESRS-40a project and access all related materials, including news, meetings and background documents.
Questions ? Get in touch: esrs-40a@efrag.org