EFRAG opens consultation on ESRS for third-country undertakings

On 23 July 2026, EFRAG published the Draft ESRS for third-country undertakings (referred to as ESRS-40a) for public consultation. The comment period ends on 31 October 2026.

The ESRS-40a specify the reporting requirements set out in Article 40a of the Accounting Directive, according to which, for the first time, certain third-country undertakings with significant economic activities in the EU are required to provide sustainability-related information. Based on Recital 20 of the CSRD, this is intended, on the one hand, to ensure that third-country undertakings are transparent about the impacts of their business activities and can be held accountable for them. On the other hand, it is supposed to foster a level playing field for those undertakings operating in the EU market.

In particular, Article 40a(1) of the Accounting Directive specifies two cases that trigger a reporting obligation concerning third-country undertakings:

1. Third-country undertaking with a net turnover in the Union exceeding EUR 450m for each of the last two consecutive financial years and an EU subsidiary with a net turnover exceeding EUR 200m in the preceding financial year; or
2. Third-country undertaking with a net turnover in the Union exceeding EUR 450m for each of the last two consecutive financial years and no qualifying EU subsidiary, but an EU branch with a net turnover exceeding EUR 200m in the preceding financial year.

It is important to note that the reporting requirements for third-country undertakings apply only through their respective EU subsidiaries or EU branches. In addition, sustainability reporting is generally limited to impacts, while disclosures on risks and opportunities (including information on resilience and dependencies) are excluded.

With regard to the reporting scope, EFRAG proposes two approaches in the Draft. First, undertakings whose activities trigger a reporting obligation in the EU may voluntarily report on their operations at the global level (referred to as Global Approach). In addition, there is the option of applying a “Mixed Approach” under which sustainability reporting for topics other than climate change may be limited to EU-related impacts, if certain conditions are met.

EFRAG invites comments on these approaches and other issues in the Draft.