EFRAG consults on ESRS for Certain Non-EU Undertakings in Accordance with Article 40a of the Account
EFRAG consults on ESRS for Certain Non-EU Undertakings in Accordance with Article 40a of the Account
EFRAG has published an exposure draft of the ‘European Sustainability Reporting Standards (ESRS) for Certain Non-EU Undertakings in Accordance with Article 40a of the Accounting Directive’ (‘ESRS-40a’), which is open for feedback until 31 October 2026.
The proposed standards are intended for non-EU groups with significant operations in the EU, specifically for EU subsidiaries or branches with a non-EU parent where the net turnover of the subsidiary or branch exceeds EUR 200m in the preceding fiscal year and where the non-EU group revenue exceeds EUR 450m in the EU in each of the last two years.
The proposed standards would apply on a mandatory basis to financial years beginning on or after 1 January 2028.
The draft ESRS-40a was developed in response to Article 40a of the Accounting Directive, which requires sustainability reporting by certain EU subsidiaries and branches of non-EU parent companies.
While draft ESRS-40a retains the same 12-standards structure as the revised ESRS adopted by the European Commission in July 2026, it introduces several differences. Notably, it focuses on reporting impacts rather than risks, opportunities, resilience and dependencies, allows non-climate disclosures to be limited to EU-related impacts only, and does not include EU Taxonomy-related disclosures.
EFRAG will use feedback on the exposure draft to develop its final technical advice to the European Commission.
More information is available in the press release.
Supporting materials, including a comparison with the full ESRS, a log of amendments, webinar recordings and FAQs, are available on EFRAG's website at the link.
Exposure draft ESRS-40a can be accessed at the link.
Basis for Conclusions is available at the link.
The proposed standards are intended for non-EU groups with significant operations in the EU, specifically for EU subsidiaries or branches with a non-EU parent where the net turnover of the subsidiary or branch exceeds EUR 200m in the preceding fiscal year and where the non-EU group revenue exceeds EUR 450m in the EU in each of the last two years.
The proposed standards would apply on a mandatory basis to financial years beginning on or after 1 January 2028.
The draft ESRS-40a was developed in response to Article 40a of the Accounting Directive, which requires sustainability reporting by certain EU subsidiaries and branches of non-EU parent companies.
While draft ESRS-40a retains the same 12-standards structure as the revised ESRS adopted by the European Commission in July 2026, it introduces several differences. Notably, it focuses on reporting impacts rather than risks, opportunities, resilience and dependencies, allows non-climate disclosures to be limited to EU-related impacts only, and does not include EU Taxonomy-related disclosures.
EFRAG will use feedback on the exposure draft to develop its final technical advice to the European Commission.
More information is available in the press release.
Supporting materials, including a comparison with the full ESRS, a log of amendments, webinar recordings and FAQs, are available on EFRAG's website at the link.
Exposure draft ESRS-40a can be accessed at the link.
Basis for Conclusions is available at the link.