At the end of July 2026, EFRAG released further details on the reporting standards that will apply to certain non-EU groups under the CSRD.
At the end of July 2026, EFRAG released further details on the reporting standards that will apply to certain non-EU groups under the the CSRD.
Alongside the US, the UK and Japan, Switzerland is one of the countries with the highest proportion of affected companies.
The Omnibus Directive narrows the scope – but who remains affected?
The revised thresholds reduce the number of affected companies to around 1,200 worldwide. Non-EU groups are in scope of ESRS-40a for financial year 2028 if they meet the following conditions:
- The non-EU company generated net turnover in the EU exceeding €450 million in two consecutive years, and
- the company has an EU subsidiary or branch generating net turnover of more than €200 million
Requirements and reporting options
Unlike the Simplified ESRS for EU companies, for which EFRAG published the delegated act in early July 2026, the ESRS-40a framework focuses exclusively on actual and potential impacts on people and the environment (impact materiality) – without any obligation to report on financial risks, opportunities or dependencies.
Nevertheless, the proposed framework covers the same twelve standards as the Simplified ESRS. In addition to the two cross-cutting standards, ESRS-40a 1 – General Requirements and ESRS-40a 2 – General Disclosures, the ESRS-40a require extensive disclosures on governance, strategy, actions, as well as metrics and targets across the following ten topical standards.
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Environment |
Social | Corporate governance |
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E1 – Climate change |
S1 – Own workforce |
G1 – Business Conduct |
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E2 – Pollution |
S2 – Workers in the value chain |
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E3 – Water |
S3 – Affected Communities |
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E4 – Biodiversity and ecosystems |
S4 – Consumers and End-users |
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E5 – Circular Economy and resource use |
The current draft discusses three options for the reporting scope:
- Option 1 requires global reporting on all material sustainability-related impacts.
- Option 2 follows a mixed approach, requiring global reporting for climate-related impacts, while allowing other environmental, social and governance topics to be limited to EU-relevant impacts.
- Option 3 allows for voluntary application of the full ESRS – an option that may be attractive for groups with significant EU activities, as certain EU subsidiaries could benefit from exemption provisions.
Another central aspect of EFRAG’s ESRS-40a proposal is interoperability with the IFRS Sustainability Disclosure Standards. Many companies affected by ESRS-40a already report under IFRS S1 and S2. EFRAG is therefore exploring ways to align common content, allow references to existing IFRS reports and avoid duplicate reporting requirements. However, given the different materiality focus of the two reporting frameworks, full harmonization should not be expected.
Act now – seize the opportunity presented by the consultation phase
All content currently available remains in draft form; the final standards are still pending. On 23 July 2026, EFRAG launched the public consultation on the reporting standards previously known as N-ESRS and later ESRS-TC. Following the publication of the exposure drafts, the standards were renamed once again and are now referred to as ESRS-40a, reflecting Article 40a of the EU Accounting Directive, which governs, among other matters, sustainability reporting requirements for EU and non-EU groups.
Stakeholders have until 31 October 2026 to submit feedback, communicate their positions, and begin preparing for the upcoming requirements. Following the consultation phase, EFRAG aims to complete its technical advice to the European Commission by January 2027, with adoption of the final standard expected by mid-2027. Under this timeline, affected companies would be required to report for the first time on financial year 2028.
Now is the time to assess whether your company falls within the scope of ESRS-40a and to determine how existing IFRS or ESRS reporting processes can be leveraged.
We would be pleased to support you in this assessment and in developing an ESRS-40a implementation roadmap. Please feel free to contact us.