The Platform on Sustainable Finance, an official advisory body to the European Commission, has issued a formal statement on the European Financial Reporting Advisory Group’s (EFRAG) Exposure Draft European Sustainability Reporting Standards for certain non-EU undertakings (ESRS 40-a).
The draft standard, established in accordance with Article 40a of the Accounting Directive, sets out sustainability reporting obligations for non-EU entities with significant business operations in the European Union. The public consultation on the draft framework remains open through 31 October.
In its submitted position paper, the advisory platform outlined three core recommendations for the European Commission and EFRAG to incorporate into the finalized ESRS 40-a framework:
- Alignment with EU standards: Maintain high alignment between ESRS 40-a and the core ESRS rules applied to EU-headquartered companies, ensuring equivalent reporting standards while accommodating the specific statutory mandate for non-EU entities.
- EU taxonomy integration: Promote appropriate disclosures related to the EU Taxonomy to ensure non-EU corporate data effectively integrates into the broader European sustainable finance regulatory ecosystem.
- Consistent reporting perimeter: Retain a unified global reporting scope for assessing corporate sustainability impacts, advising regulators against adopting a fragmented “mixed approach” across parent and subsidiary operations.
The Platform’s recommendations aim to preserve market equity between domestic and foreign enterprises while ensuring global investors receive consistent, comparable environmental and governance metrics across global value chains operating within the European Single Market.
