EFRAG has published its ESRS-40a Exposure Draft, a dedicated set of European Sustainability Reporting Standards that certain large non-EU companies with significant EU activity will use to report their impacts on people and the environment. The standards are open for public consultation from 23 July to 31 October 2026, with mandatory reporting beginning for financial years starting on or after 1 January 2028. ESRS-40a builds on the existing ESRS architecture but focuses on impacts only, and lets in-scope groups choose between global and EU-related reporting for non-climate topics.
The Corporate Sustainability Reporting Directive (CSRD) extends sustainability disclosure obligations to certain non-EU undertakings with substantial activity inside the European Union. Under Article 40a of the Accounting Directive, the European Commission must adopt a tailored set of European Sustainability Reporting Standards for these companies — and at the Commission's request, EFRAG developed the ESRS-40a Exposure Draft to fill that role. (Earlier EFRAG drafts referred to these as Non-EU ESRS (N-ESRS) or ESRS for Third-Countries (ESRS-TC).)
The core goal is twofold: create a level playing field for businesses competing in the EU market, and ensure that the world's largest non-EU groups are transparent and accountable for how their operations affect people and the planet.
Who Has to Report?Following the Omnibus amendments, ESRS-40a applies to non-EU undertakings that generate more than EUR 450 million in net EU turnover in each of the last two consecutive financial years, and that either operate an EU branch generating more than EUR 200 million, or are the ultimate parent of EU subsidiaries generating more than EUR 200 million. In-scope groups publish a sustainability report at the level of their third-country parent company's group.
Key DatesReporting under Article 40a of the Accounting Directive becomes mandatory for financial years starting on or after 1 January 2028, meaning the first sustainability statements will cover financial year 2028 and be published in 2029. Before then, the Exposure Draft is open for public consultation from 23 July to 31 October 2026 (a 100-day window), and EFRAG will launch a Cost-Benefit Analysis in mid-August 2026.
How ESRS-40a Differs From Standard ESRSThe draft deliberately mirrors the existing framework while trimming it for a third-country context. It retains the same overall architecture of 12 standards but focuses on impacts only, removing disclosures on risks, opportunities, resilience, and dependencies. It also introduces targeted additions specific to Article 40a — most notably a “mixed approach” that lets reporting groups limit disclosure to EU-related impacts for topics other than climate, while climate reporting remains global.
Have Your SayEFRAG is inviting feedback on the drafting approach, references to EU legislation, the global-versus-EU reporting option, and interoperability with IFRS Sustainability Disclosure Standards. Stakeholders can review the Exposure Draft and submit comments through the official online questionnaire before the 31 October 2026 deadline.
Read more at: EFRAG — ESRS for Certain Non-EU Undertakings (Article 40a)