At the end of July 2026, EFRAG published further details on the reporting standards that are to apply to certain non-EU groups under 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 of those affected – but who remains within the scope?
The revised thresholds reduce the number of affected companies to around 1,200 worldwide. Non-EU groups that meet the following conditions for the 2028 financial year are affected:
- The net turnover of the non-EU parent group in the EU exceeds €450 million in two consecutive years, and
- the company has an EU subsidiary or branch with net turnover of more than €200 million
Requirements and reporting options
Unlike the Simplified ESRS for EU companies, the delegated act for which was published by EFRAG 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 comprises the same twelve standards as the Simplified ESRS. In addition to the two overarching standards, ESRS-40a 1 – General Requirements and ESRS-40a 2 – General Disclosures, the ESRS-40a requires extensive disclosures on governance, strategy, measures, as well as key performance indicators and targets relating to the following ten topic-specific standards.
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Environment |
Social | Corporate governance |
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E1 – Climate Change |
S1 – Own workforce |
G1 – Corporate policy |
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E2 – Environmental pollution |
S2 – Workers in the value chain |
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E3 – Water and marine resources |
S3 – Affected communities |
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E4 – Biodiversity and ecosystems |
S4 – Consumers and end users |
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E5 – Resource use and the circular economy |
Three options are still under discussion in the current draft regarding the scope of reporting:
- Option 1 provides for global reporting on all material sustainability-related impacts.
- Option 2 follows a hybrid approach, whereby climate-related impacts must be reported globally, whilst the other topics – social issues and corporate governance – may be limited to EU-relevant impacts.
- Option 3 allows for the voluntary application of the full ESRS – which may be of interest to groups with significant EU operations, as certain EU subsidiaries could benefit from exemption provisions.
Another key issue in EFRAG’s proposals on ESRS 40a is interoperability with the IFRS Sustainability Disclosure Standards (IFRS SDS). Many of the companies affected by ESRS 40a already report in accordance with IFRS S1 and S2, which is why EFRAG is examining ways to align common content, reference existing IFRS reports and avoid double reporting. However, given the differing focus on materiality between the two reporting standards, full harmonisation is not to be expected.
Act now – seize the opportunity presented by the consultation phase
All content available to date is still at the draft stage – the final standards are yet to be issued. On 23 July 2026, EFRAG launched the public consultation on the reporting standards previously known as N-ESRS and later as ESRS-TC. Following the publication of the drafts, the standards were renamed again and are now referred to as ESRS-40a, in line with Article 40a of the EU Accounting Directive, which, amongst other things, also regulates sustainability reporting by (non-)EU groups.
Until 31 October 2026, stakeholders have the opportunity to submit their views and prepare for the requirements at an early stage. Following the consultation phase, the European Commission’s technical consultation is due to be concluded in January 2027, with a view to adopting the final standard in mid-2027. This timetable would mean that affected companies would be required to report for the first time for the 2028 financial year.
Check now whether your company falls within the scope of the standard and how existing IFRS or ESRS processes can be utilised.
We would be happy to assist you with this assessment and with developing an ESRS 40a roadmap. Please feel free to contact us.
