ESRS-40a for Non-EU Undertakings: The FY2028 Reporting Trigger

On 11 September 2026 EFRAG opened a survey asking large non-EU companies to put a number on the cost of a reporting obligation many of them have not yet started to build for. The obligation sits in Articles 40a to 40d of the EU Accounting Directive: from financial year 2028, the EU subsidiary or branch of a large non-EU parent group has to publish a sustainability report about that group’s impacts on people and the environment. The standard those reports will follow, ESRS-40a, is currently an EFRAG exposure draft out for public consultation until 31 October 2026, and the cost-benefit survey that will shape EFRAG’s final advice to the European Commission closes earlier, on 11 October 2026 at 23:59 CEST.

Two things make this worth a compliance team’s attention now rather than in 2028. First, the perimeter narrowed sharply. The Omnibus I Directive lifted the entry thresholds, and EFRAG’s own preliminary estimate puts roughly 1,200 non-EU groups in scope after Omnibus I, down from around 10,000 under the original CSRD text. Second, the reporting obligation itself is settled EU law, but the content of the standard is still a draft. That gap is the focus of the current consultation process: EFRAG is gathering feedback through the public consultation, field testing, outreach events and the cost-benefit analysis before finalising its technical advice.

If your group is the EU arm of a non-EU parent with meaningful European turnover, ESRS-40a gives you a two-part job over the next few months. Check whether the group crosses the new turnover thresholds, because the obligation lands on the EU subsidiary or branch even when the parent is the reporting subject. Then decide whether the consultation is worth answering, because the mixed approach and the deletions from the full standard are exactly the points EFRAG has flagged as open.

Related reading: our guide to CSRD reporting for third-country undertakings and non-EU groups.

The dates that decide whether you need to act

This is a deadline-driven item, so the calendar comes first. The dates below are drawn from EFRAG’s 22 July 2026 public presentation and the exposure draft consultation package.

• 23 July 2026: EFRAG launched the public consultation on the ESRS-40a exposure draft. The field test ran alongside the consultation; the cost-benefit analysis was a separate workstream and its survey had not yet been opened by the 23 July consultation announcement.
• 30 September 2026: field test closes (open to registered and approved companies only).
• 11 October 2026, 23:59 CEST: cost-benefit analysis survey closes.
• 31 October 2026, 18:00 CET: public consultation on the exposure draft closes (open to all).
• January 2027: EFRAG expects to deliver its technical advice on ESRS-40a to the European Commission, published together with the final cost-benefit analysis report.
• Financial year 2028: the reporting requirement in Articles 40a to 40d applies, with the first reports published in 2029.

The two October deadlines are not the same exercise. The 31 October date is the formal public consultation on the exposure draft, open to anyone. The 11 October date is a separate survey run for the cost-benefit analysis, aimed specifically at non-EU companies within the ESRS-40a scope, and it is the one that closes first. A group that only files a consultation response and ignores the survey will have missed the channel EFRAG built to capture preparer cost data.

Where the obligation comes from in EU law

The reporting duty sits in Articles 40a to 40d of the Accounting Directive (Directive 2013/34/EU), inserted by the Corporate Sustainability Reporting Directive (Directive (EU) 2022/2464, the CSRD) and then amended by the Omnibus I Directive (Directive (EU) 2026/470 of 24 February 2026). Those are Level 1 provisions, binding law that EFRAG cannot rewrite, and the exposure draft can only specify how a report is prepared, not whether it is owed.

Article 40a(2) sets out which standards apply. The default is the dedicated set of standards for certain third-country undertakings that the Commission is to adopt under Article 40b, which is where ESRS-40a fits. A group may instead prepare the report under the full ESRS, or under sustainability reporting standards that the Commission has determined to be equivalent through an implementing act under Article 23(4) of the Transparency Directive. Article 40b requires the Commission to adopt the third-country sustainability reporting standards by delegated act and still records a statutory adoption deadline of 30 June 2026, which has passed without adoption. EFRAG currently expects to deliver its technical advice in January 2027, after which the Commission says it will launch its own public consultation before adopting the delegated act.

Article 40c allocates responsibility. A branch is responsible, to the best of its knowledge and ability, for ensuring the sustainability report is drawn up under Article 40a and published under Article 40d. For an EU subsidiary, the members of the administrative, management and supervisory bodies carry that responsibility collectively. Article 40d fixes publication timing, which the standard cannot shorten or extend. The point worth holding onto is that ESRS-40a interprets Level 1 text; it does not replace it, and the consultation cannot move the FY2028 application date, which is set by the second subparagraph of Article 5(2) of the CSRD.

Who is caught after Omnibus I

Omnibus I changed the scope test but not the substance of what has to be reported. Under the amended Article 40a(1), the parent-level gate is net turnover in the EU exceeding EUR 450 million in each of the last two consecutive financial years, measured at group level or, if not applicable, individual level. The subsidiary route applies where an EU subsidiary exceeds EUR 200 million net turnover in the preceding financial year. The branch route applies only where the third-country undertaking does not have a subsidiary undertaking covered by the subsidiary limb and the EU branch exceeds EUR 200 million net turnover in the preceding financial year.

Those numbers replaced a lower and structurally different set. The previous Article 40a(1) caught third-country undertakings generating more than EUR 150 million in the EU that had either an EU subsidiary already within CSRD scope or an EU branch with net turnover above EUR 40 million. The shift from EUR 150 million to EUR 450 million at group level, and the new EUR 200 million subsidiary or branch floor, is what cuts EFRAG’s population estimate from roughly 10,000 to roughly 1,200. EFRAG’s country breakdown of that estimate points mainly at United States groups (350 to 450), the United Kingdom (150 to 200), and Switzerland and Japan (around 100 to 150 each), with smaller counts elsewhere. EFRAG is explicit that no official list exists and these are analytical estimates.

Two scope details catch people out. The first is that headcount is irrelevant here. Employee numbers do not feature in the Article 40a(1) test at all, so the familiar CSRD instinct of pairing a turnover figure with an employee count does not carry across. The second is that the EUR 450 million EU-turnover test is applied at the level of the third-country undertaking’s group or, if group level is not applicable, at its individual level, rather than at the level of the EU subsidiary or branch that publishes the report. A group can be comfortably below the parent’s EUR 450 million EU threshold while a single subsidiary sits above EUR 200 million, and in that case no ESRS-40a report is owed because the parent-level gate is not met.

There is also a carve-out that is easy to miss. Under the seventh subparagraph of the amended Article 40a(1), where the third-country undertaking is a financial holding undertaking whose subsidiaries’ business models and operations are independent of one another, the subsidiaries and branches may decide not to publish the report. This is a targeted exemption for genuinely unconnected holdings, not a general escape for any group with a holding company at the top.

One boundary is worth separating from the Article 40a route entirely. A third-country undertaking that is itself listed on an EU regulated market, exceeds EUR 450 million net turnover and averages more than 1,000 employees, is pulled into full ESRS disclosure through Articles 19a and 29a of the Accounting Directive read with Article 4(5) of the Transparency Directive (Directive 2004/109/EC). That is a different obligation from the Article 40a report, and confusing the two produces the wrong standard and the wrong assurance expectation.

What an ESRS-40a report actually has to contain

ESRS-40a is built on the revised ESRS text adopted by the Commission on 3 July 2026. As of 12 September 2026, that amending delegated regulation is not yet in force because it has not yet been published in the Official Journal; EFRAG nevertheless uses the Commission-adopted text as the drafting base for ESRS-40a. EFRAG’s exposure draft then strips the framework back to impacts. The full ESRS asks undertakings to report impacts, risks and opportunities under a double materiality lens. ESRS-40a keeps the impacts and removes risks, opportunities, resilience and dependencies (EFRAG labels this cluster RORD in its log of amendments). The stated objective is a level playing field and transparency on the impacts of non-EU groups with relevant EU activity, so the standard follows the money to impacts on people and the environment rather than to enterprise value.

The content anchor is Article 40a(1) itself, which points to specific parts of Article 29a(2): points (a)(iii) to (a)(v) on transition plans and the group’s business model, strategy and implementation; points (b) to (f) on time-bound targets, the role of the administrative, management and supervisory bodies, policies, incentive schemes, the due diligence process and principal adverse impacts with the actions taken; and, where appropriate, point (h) on relevant indicators. The report is prepared at the group level of the ultimate third-country parent, or at that undertaking’s individual level where a group does not apply.

For a practitioner used to the full sustainability statement, the tell that this is a lighter regime is what is absent. There is no Article 8 Taxonomy Regulation reporting under ESRS-40a. The topical architecture still runs across twelve standards, the two cross-cutting standards plus E1 to E5, S1 to S4 and G1, but the disclosures inside them are trimmed to the impact perspective. EFRAG’s markup document flags that financial information is not strictly excluded where it gives context for understanding an impact, which is a narrower gateway than the financial-effects disclosures a full statement carries. Our note on the revised, simplified 2026 ESRS covers the base standard that ESRS-40a starts from.

Three ways to report, and one exemption that closes fast

A group in Article 40a scope has three routes in the exposure draft. The global approach reports material impacts at the global level across all topics. The mixed approach reports climate impacts globally but lets the group limit other topics to EU-related impacts. The third route is to apply the full ESRS voluntarily.

The route choice interacts with a subsidiary exemption that people tend to assume is broader than it is. The exposure draft provides that an EU subsidiary or branch need not publish a separate ESRS-40a report where the ultimate non-EU parent prepares a sustainability statement under the full ESRS, or under standards that the Commission has determined equivalent through an implementing act under Article 23(4) of the Transparency Directive, and the applicable assurance and accessibility conditions are met. Any exemption for EU subsidiaries otherwise subject to Articles 19a or 29a remains subject to the separate conditions in those provisions. The condition that closes the door is the word full. The exemption keys off the parent applying the full ESRS, not the parent applying ESRS-40a in its global or mixed form. A group that opts for the lighter ESRS-40a mixed approach at the top does not thereby exempt its EU entities from the Article 40a filing.

The mixed approach is the real design fight

The mixed approach is where the exposure draft is doing genuinely new standard-setting, and it is the part EFRAG most wants tested. The idea is a global perimeter with an option to narrow non-climate impacts to those that are EU-related. Climate stays global and is never narrowed. For the other environmental, social and governance topics, a group can limit disclosure to EU-related impacts, applied by topic, sub-topic or group of impacts.

EFRAG’s draft defines EU-related impacts to include two limbs at once: customer-based impacts, meaning products or services that were or could reasonably be expected to be sold or provided in the EU market, and location-based impacts, meaning activities carried out in the EU. Upstream and downstream value chain outside the EU still falls within the definition of impacts, so the mixed approach does not draw a clean line at the EU border. To use it, a group has to meet the condition for meaningful identification of EU-related impacts and, under BP-1, explain how it concluded that the condition is met, how it determined EU-related impacts and the level at which it applied the approach. Allocation keys are addressed separately in GDR-M for estimated mixed-approach metrics.

The mixed approach is the provision most likely to move between the exposure draft and the final standard, because EFRAG has published the concerns its own members raised about it: comparability, the level playing field, and the practical and audit challenges of separating and estimating EU-related impacts. EFRAG has explicitly added implementation, applicability and assurability of the mixed approach to the field test and the consultation questions. A preparer who can show, with numbers, where the allocation becomes unworkable is answering the exact question EFRAG is asking. The consultation also seeks input on the deletions and additions versus the full ESRS, on the references to EU laws and their feasibility, and on interoperability and incorporation by reference for groups already reporting under jurisdictional standards based on IFRS S1 and S2.

Assurance, publication and the digital route

Article 40a(3) requires the report to carry an assurance opinion, given by a person or firm authorised to assure sustainability reporting under the national law of either the third-country undertaking or a Member State. Where the parent does not provide that opinion, the EU subsidiary or branch has to publish a statement recording that the assurance opinion was not made available. The same fallback logic runs through the information itself: if the parent will not supply what is needed, the subsidiary or branch requests it, and failing that draws up the report with the information in its possession and states plainly that the parent did not provide the rest.

Article 40d sets publication within 12 months of the balance sheet date of the financial year reported. If the documents are not made available free of charge through the national business register, they have to be posted, free of charge and in at least one official EU language, on the website of the EU subsidiary or branch within the same 12-month window. On the digital side, EFRAG’s exposure-draft presentation states that ESRS-40a itself adds no machine-readable-format requirement and gives PDF as an example of a data-extractable format. Article 33a nevertheless requires information submitted for ESAP to be in a data-extractable format or, where Union or national law requires it, a machine-readable format. From January 2028, the Article 40a reports and related assurance opinions and statements must be submitted to the relevant collection body for ESAP. Groups that have been budgeting for full XBRL tagging on ESRS-40a should check that assumption against the exposure draft. EFRAG’s separate 2026 draft list of ESRS datapoints and XBRL taxonomy sits on the full-ESRS track and is on its own consultation timetable.

What the survey is for, and why a preparer should answer it

The cost-benefit analysis is run by external consultants engaged by EFRAG, not by EFRAG’s technical staff, and it feeds the advice EFRAG sends the Commission. EFRAG has said the analysis weighs the costs to reporting companies against the benefits, including the level-playing-field benefit to EU companies, and that the final cost-benefit report will be published alongside the technical advice. The survey is the structured way in-scope non-EU groups get their cost data into that calculation; a PDF of the questionnaire is available inside the online survey, and EFRAG is also running stakeholder interviews.

The reason to treat the survey as more than a courtesy is timing. EFRAG expected preliminary cost-benefit findings by the end of September 2026, ahead of the 11 October survey close, and the advice is due in January 2027. Once the advice is filed, the arguing moves to the Commission’s adoption of the delegated act, where the room to reshape preparer-level mechanics like the mixed approach is far smaller. Cost evidence submitted now, while the standard is still an EFRAG draft, is aimed at the body that can still change it.

Common misreads worth catching early

A handful of errors are already predictable from how the file is being discussed. The first is treating Omnibus I as a repeal. It raised the thresholds and cut the population, but Articles 40a to 40d survive and the FY2028 start date is intact for the groups that still clear the higher gates. The second is assuming the parent files. The reporting subject is the group’s impacts, but the filing entity, the responsible body and the publication duty all sit with the EU subsidiary or branch. A non-EU parent has no direct EU filing obligation under Article 40a; it has an EU entity that does.

The third is reaching for the full ESRS by reflex. ESRS-40a is impacts-only, with no risks, opportunities, resilience or dependencies and no Article 8 Taxonomy disclosures, so a team that builds to the full statement will over-collect. The fourth is conflating the two October deadlines, and with them the two very different acts of engagement, a general consultation response versus a scoped preparer cost survey. Getting the standard, the filer and the calendar right is the groundwork the drafting stage rewards; the disclosure detail can follow once those three are settled.

Frequently Asked Questions

If our non-EU parent already publishes a full ESRS sustainability statement, do our EU entities still file under ESRS-40a?

No. Where the ultimate third-country parent prepares a statement under the full ESRS, or under standards that the Commission has determined equivalent through an implementing act under Article 23(4) of the Transparency Directive, and the applicable assurance and accessibility conditions are met, the exposure draft says the EU subsidiary or branch need not publish a separate ESRS-40a report. EU subsidiaries otherwise reporting under Articles 19a or 29a may rely on the parent reporting only where the separate exemption conditions in those provisions are satisfied. The exemption depends on the parent using the full ESRS, not the lighter ESRS-40a global or mixed forms.

We have an EU branch but no EU subsidiary. Does the regime still reach us?

Yes. Article 40a applies to a subsidiary undertaking established in the EU or a branch located in the EU. Where the ultimate third-country parent has only branches and not subsidiaries, the exposure draft prepares the report at the individual level of that ultimate undertaking, and the branch carries the Article 40c responsibility for drawing it up and publishing it.

Is climate reporting ever limited to EU activity under the mixed approach?

No. The mixed approach keeps climate impacts at the global level and does not allow them to be narrowed. The option to limit disclosure to EU-related impacts applies only to non-climate topics, and even then a group has to satisfy the meaningful-identification condition and explain its methodology under disclosure requirement BP-1.

Who can sign the assurance opinion for an ESRS-40a report?

Article 40a(3) allows the opinion to be given by a person or firm authorised to assure sustainability reporting under the national law of either the third-country undertaking or a Member State. If the parent does not make an assurance opinion available, the EU subsidiary or branch publishes a statement saying so rather than leaving the gap unexplained.

Does a report under ESRS-40a have to be tagged in a machine-readable format?

EFRAG’s exposure-draft presentation states that ESRS-40a itself adds no machine-readable-format requirement and gives PDF as an example of a data-extractable format. Article 33a requires a data-extractable format or, where Union or national law requires it, a machine-readable format. From January 2028, the relevant Article 40a documents must be submitted to the collection body for ESAP.

What happens if our parent simply refuses to give us the group data?

The exposure draft has a fallback. The EU subsidiary or branch first requests the necessary information from the ultimate parent. If it is not provided, the entity draws up, publishes and makes accessible a report containing the information it does hold, and issues a statement recording that the third-country undertaking did not provide the rest.

Is the January 2027 date when we will know the final rules?

Not quite. January 2027 is EFRAG’s expected date for technical advice, not the date on which ESRS-40a becomes binding. A Commission delegated act under Article 40b must still be adopted and complete the applicable scrutiny and entry-into-force process. The FY2028 application date is already fixed in the CSRD.

Related Articles

• CSRD Reporting for Third-Country Undertakings and Non-EU Groups: how the Article 40a regime fits within the wider CSRD architecture for non-EU parents.
• Revised ESRS and Simplified CSRD Reporting in 2026: the base 2026 standards that ESRS-40a starts from before stripping back to impacts.
• CSRD Omnibus and the Value Chain Cap: the Omnibus I changes that reshaped CSRD scope and the value chain limits.
• EFRAG 2026 Draft ESRS Datapoints List: the datapoints and XBRL taxonomy work running on the full-ESRS track.
• CBAM Verification and Accreditation Guidance: another EU regime built around a level playing field for non-EU activity.

Key Takeaways

• The ESRS-40a cost-benefit survey closes on 11 October 2026 at 23:59 CEST; the public consultation on the exposure draft closes on 31 October 2026 at 18:00 CET. They are separate exercises.
• Scope after Omnibus I: the third-country undertaking must exceed EUR 450 million net turnover in the EU in each of the last two consecutive financial years at group level or, if not applicable, individual level. An EU subsidiary route requires that subsidiary to exceed EUR 200 million in the preceding year; a branch route applies only where there is no subsidiary undertaking covered by the subsidiary limb and the branch exceeds EUR 200 million. Employee numbers do not form part of Article 40a(1)’s threshold test.
• The filing, responsibility and publication duties sit with the EU subsidiary or branch under Articles 40a and 40c, even though the report is about the non-EU parent group.
• ESRS-40a is impacts-only: no risks, opportunities, resilience or dependencies, and no Article 8 Taxonomy disclosures.
• The subsidiary exemption applies only where the parent reports under the full ESRS or standards the Commission has determined equivalent by implementing act, not where it uses the ESRS-40a global or mixed approach.
• The mixed approach keeps climate global and lets other topics narrow to EU-related impacts, subject to the BP-1 condition and methodology disclosure. It is EFRAG’s most open design question.
• The obligation applies from financial year 2028 with first publication in 2029; EFRAG’s advice and final cost-benefit report are due in January 2027, ahead of Commission adoption of the delegated act.

Sources and References

• EFRAG, “EFRAG Calls for Public Input on Cost-Benefit Analysis for the Exposure Draft ESRS for Certain Non-EU Undertakings (ESRS-40a)”, 11 September 2026: efrag.org news
• EFRAG, ESRS-40a Exposure Draft public presentation, 22 July 2026 (PDF): efrag.org presentation
• EFRAG, ESRS-40a Exposure Draft, Log of Amendments (Annex to the Basis for Conclusions), July 2026 (PDF): efrag.org log of amendments
• EFRAG, ESRS-40a Exposure Draft, Markup versus Revised ESRS of 3 July 2026, July 2026 (PDF): efrag.org markup
• Directive 2013/34/EU (Accounting Directive), consolidated text including Articles 40a to 40d: EUR-Lex
• Directive (EU) 2022/2464 (Corporate Sustainability Reporting Directive): EUR-Lex
• Directive (EU) 2026/470 (Omnibus I Directive), 24 February 2026: EUR-Lex
• Directive (EU) 2024/1306 postponing the deadline for adoption of third-country sustainability reporting standards (amending Art 40b of Directive 2013/34/EU: date ’30 June 2024′ replaced by ’30 June 2026′): EUR-Lex
• Commission Delegated Regulation (EU) 2023/2772 (ESRS Set 1), the base standards later revised by the 3 July 2026 delegated act: EUR-Lex

What to do before the survey closes

The near-term work is small and specific. Confirm whether the third-country undertaking clears the EUR 450 million EU-turnover gate at group level or, if not applicable, individual level; then identify any qualifying EU subsidiary above EUR 200 million and, only where the subsidiary route does not apply, any EU branch above EUR 200 million. If those tests are met, separately assess the Article 40a(1) financial-holding derogation. If the group is in scope, it has until 11 October 2026 to file cost data through the EFRAG survey and until 31 October 2026 to lodge a consultation response on the exposure draft, and both windows shut before EFRAG hands its advice to the Commission in January 2027.

Disclaimer: The information on RegReportingDesk.com is for educational and informational purposes only. It does not constitute legal, regulatory, tax, or compliance advice. Always consult your compliance officer, legal counsel, or the relevant supervisory authority for guidance specific to your institution.