Analysis of European Sustainability Reporting Standards for Non-EU Companies (ESRS-40a)
The European sustainability reporting system is gradually extending beyond companies registered in the EU. CSRD introduced a separate regime for large international groups based outside the EU that have a significant economic presence on the European market. To give effect to those requirements, EFRAG has developed a separate standard, ESRS-40a.
It reflects the broader logic of EU regulation: large companies earning significant revenues on the European market should provide a comparable level of transparency about their impacts on people and the environment, regardless of where their parent company is located. The aim is to support both transparency and a level playing field in the EU.
At the same time, ESRS-40a sets out a somewhat narrower list of CSRD requirements for foreign companies operating with the EU. Following the 2026 revision of the legislation, its scope is focused on the largest international groups with a substantial presence in the EU. This is why the standard occupies a distinct place between the European system and the global reporting frameworks.
From ESRS to ESRS-40a
ESRS-40a is built on the same architecture as the ESRS: the 12 standards are retained, along with all environmental, social and governance topics and the coverage of the value chain. This is therefore not a simplified set of individual ESG metrics for non-EU companies, but a full sustainability reporting system.
There is, however, a fundamental conceptual difference between the two systems. The ESRS are built on double materiality, where a company assesses both its impacts on people and the environment and the financial risks and opportunities associated with sustainability. ESRS-40a covers impact materiality only.
Another important feature is the Mixed Approach proposed by EFRAG. Climate change reporting remains global, while for other topics a company may focus on impacts connected with its activities and its market in the EU. In this way EFRAG seeks to reconcile the global nature of international groups with the specific purpose of European regulation.
The standard is still taking shape
ESRS-40a has a long development history. The work began as the ESRS for Non-EU Groups (NESRS) project, was temporarily suspended amid the revision of CSRD and the simplification of the ESRS, and resumed in 2026 with the new regulatory scope in mind. In July 2026 EFRAG published the Exposure Draft of ESRS-40a.
It is therefore important to distinguish between what EU legislation has already established and what remains an EFRAG proposal. Article 40a already sets the main scope criteria and the start of reporting for financial years from 2028. The detailed architecture of ESRS-40a, including the Mixed Approach and individual disclosure rules, may still change before the standard is adopted by the European Commission.
This study is based on the legislation of the EU in force and the Exposure Draft of ESRS-40a as of 2026. It examines not only the individual requirements, but also the logic of the standard, how it differs from the full ESRS and how it interacts with other international reporting frameworks.
Why this matters for Ukraine
For Ukrainian business, ESRS-40a already has practical significance. As long as Ukraine is not an EU member, Ukrainian companies may fall within the scope of Article 40a as non-EU companies.
At the same time, the influence of the European reporting system reaches well beyond the direct scope of Article 40a. Ukrainian companies are integrated into European value chains, set up subsidiaries in the EU, raise European financing and supply products to international groups. Information about their impacts can therefore become part of other companies' reporting even where the Ukrainian business itself has no obligation to report under ESRS-40a.
This is happening alongside the gradual introduction of the European sustainability reporting model in Ukraine. Understanding ESRS-40a therefore matters not only for individual large Ukrainian groups, but also for understanding how the wider reporting architecture into which Ukrainian business is being integrated is taking shape.
The study is currently available in Ukrainian only.
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