Proposed ESRS-40a could affect up to 200 UK-based groups from 2028

What happened

ESRS-40a is a proposed EU reporting framework for large groups headquartered outside the EU that have material activity in the bloc. EFRAG’s initial assessment indicates that roughly 1,200 companies worldwide could be affected, including an estimated 150 to 200 groups headquartered in the UK.

Under the proposal described by edie, a non-EU parent could fall within scope after generating more than €450m in EU turnover in each of two consecutive years. The proposal also refers to EU subsidiaries or branches that generated more than €200m in the preceding financial year.

The draft offers three routes: a global disclosure model, a mixed model combining EU-specific information with globally reported climate impacts, and voluntary use of the full European Sustainability Reporting Standards (ESRS).

Why it matters

For non-EU groups selling into or operating across the EU, the proposal could require an early decision on reporting boundaries, materiality processes and available data. This is relevant to businesses connected to the EU market, including groups with EU subsidiaries or branches.

The global and mixed options would use an assessment of sustainability impacts rather than the full double-materiality process. The full ESRS option would instead cover impacts, risks and opportunities, and would include EU Taxonomy disclosures. A parent using full ESRS could allow in-scope EU subsidiaries to avoid preparing separate full ESRS sustainability statements.

Groups choosing the mixed route would need to distinguish EU-related impacts from global information, while reporting climate impacts globally. Existing Global Reporting Initiative reporting may help reduce duplication under the global route.

What's next

The consultation on the proposal remains open until 31 October 2026. A final standard is expected in mid-2027, while reporting is anticipated to begin on 1 January 2028. Companies potentially affected can assess whether they meet the proposed thresholds, review their reporting systems and consider responding to the consultation before the requirements are finalised.