EU Platform, Eurosif urge EFRAG to drop mixed approach in non-EU ESRS

The EU Platform on Sustainable Finance and Eurosif have called on EFRAG to remove the mixed approach to impact reporting for large non-EU companies from the draft ESRS-40a standards, according to ESG Today.

Non-EU companies in scope of the CSRD are scheduled to report from 2029 on the 2028 financial year. The directive has applied to EU companies since the start of 2024. EFRAG's July 2026 draft limits reporting requirements to companies' impacts, dropping the wider ESRS focus on sustainability-related risks and opportunities.

For impacts other than climate, the mixed approach would let a company report globally or only on EU-related impacts: products and services sold in the EU, or of the company's activities there.

Allocators comparing companies in the same sector would see two reporting perimeters behind one set of filings. A non-EU company could report non-climate impacts on EU sales and operations alone, while an EU counterpart reports on its whole business, so a sector screen using ESRS data for the 2028 financial year would compare populations that are not like for like. Climate impacts sit outside the option either way.

EFRAG members raised concerns about the mixed approach when the draft was published. EFRAG said the option was included at the explicit request of the European Commission. The Basis for Conclusions records members' concerns that the approach would not support a level playing field between EU companies and their international peers, that using different scopes for different topics would impair understandability, and that separating EU-related impacts may not be feasible. Among the concerns EFRAG recorded was that “Relevant information may be lost, with a consequential risk of greenwashing.”