The EU’s Corporate Sustainability Reporting Directive (CSRD) is often described as an “EU regulation,” but its reach extends far beyond EU‑incorporated companies. Under Article 40a of the Accounting Directive, large non‑EU groups with significant EU turnover will also have to publish EU‑aligned sustainability reports — and EFRAG has now set out the proposed standard they will use.
On 23 July 2026, EFRAG published the ESRS‑40a Exposure Draft and opened a 100‑day public consultation running until 31 October. ESRS‑40a is designed for “third‑country undertakings” that generate more than EUR 450 million net turnover in the EU in each of the last two financial years and that either have an EU branch with turnover above EUR 200 million, or are the ultimate parent of EU subsidiaries generating more than EUR 200 million. Reporting under ESRS‑40a would become mandatory for financial years starting on or after 1 January 2028, with first sustainability statements expected in 2029.
Importantly, recent Omnibus changes have sharply reduced the size of the non‑EU CSRD population. EFRAG estimates that the revised thresholds will cut the number of non‑EU companies in scope by around 88%, from about 10,000 to 1,200. For those companies that remain in scope, however, ESRS‑40a still carries ambitious expectations on double materiality, climate, governance and impact‑focused disclosures, even as some risk‑ and opportunity‑related datapoints are simplified.
The consultation materials emphasise three objectives. First, ESRS‑40a should create a level playing field between EU and non‑EU undertakings active in the EU market, avoiding disclosure gaps that could distort competition. Second, it should ensure transparency on impacts on people and the environment from large non‑EU groups with relevant EU activities. Third, it should be interoperable with other major frameworks, particularly IFRS‑S sustainability standards, to limit duplication for global filers.
For sustainability, finance and risk teams in multinational groups, the draft standard has several practical implications.
Scope assessment and mapping. Groups with EU turnover near the 450m threshold should reassess their CSRD exposure and entity structure now, rather than waiting for the Commission’s final adoption.
Data architecture and assurance readiness. ESRS‑40a still demands granular, auditable data on climate, workforce, governance and impact topics, even with a more impact‑focused lens. Building the right data pipelines, controls and internal sign‑off processes ahead of the 2028 start date will be critical.
Mixed reporting approach. For some topics, the exposure draft contemplates a “mixed approach” that could limit required datapoints where interoperability and proportionality concerns arise. Non‑EU groups will need to understand where flexibility exists — and where EU expectations remain firm.
From a regulatory design perspective, ESRS‑40a reflects the EU’s attempt to balance burden reduction with Green Deal ambition. The revised ESRS for EU companies cut mandatory datapoints by more than half, yet the separate non‑EU standard seeks to maintain high‑quality information about impacts in the EU market. For investors and civil society, this will be a key test of whether simplification can coexist with decision‑useful transparency.
CSRD‑exposed non‑EU groups should engage actively in the consultation — reviewing the ESRS‑40a draft, participating in field tests, and feeding technical feedback to EFRAG. The comments submitted between now and 31 October will shape the final architecture of global sustainability reporting obligations for non‑EU multinationals operating in Europe.
Source: ESG Today, “EFRAG Releases Proposed CSRD Sustainability Reporting Standard for Non‑EU Companies,” and EFRAG consultation materials on ESRS‑40a.