CSRD for non-EU groups

When does the CSRD for non-EU companies apply?

A non-EU group can be caught at two levels. Its EU subsidiaries are subject to the CSRD like any EU company: after the Omnibus I Directive, an EU company or EU sub-group with more than 1,000 employees and more than 450 million euros of net turnover reports from financial years beginning in 2027. Separately, Article 40a requires a sustainability report covering the whole non-EU group where its EU business is large enough, from financial year 2028. The two can apply to the same group. See the CSRD after the Omnibus.

What are the Article 40a tests?

A non-EU ultimate parent is in scope if it generated more than 450 million euros of net turnover in the EU in each of the last two consecutive financial years, and it has either an EU subsidiary that is a large undertaking or a listed company with net turnover above 200 million euros, or an EU branch with net turnover above 200 million euros, in the preceding year. There is no employee test at group level. The EU subsidiary or branch is responsible for publishing the group report, so in practice the non-EU parent prepares it. If the parent does not provide the information, the subsidiary or branch must say so.

CSRD for non-EU companies: three groups

Three groups with EU operations test both routes for 2027 and 2028.

The US software group has more than 450 million euros of EU turnover in each of 2026 and 2027 and a German subsidiary with turnover above 200 million euros, so it must have a group report published for 2028. Its German subsidiary has only 800 employees, so it does not report in its own right. The Japanese group's EU turnover is below the test, so neither route applies. The Swiss group is caught twice: its French subsidiary exceeds both thresholds and reports from 2027, and the group falls under Article 40a from 2028. It can instead prepare one consolidated report under the full ESRS from 2027, which exempts the French subsidiary from a separate report and also satisfies Article 40a.

Which standards apply to the Article 40a report?

The CSRD allows the group report to use the ESRS, standards for non-EU groups adopted by the Commission, or standards the Commission recognises as equivalent. EFRAG published exposure drafts of ESRS-40a, the non-EU standards, on 23 July 2026, with consultation until 31 October 2026, and plans to give its advice in January 2027; the Commission is expected to adopt them in 2027. The drafts follow the structure of the revised ESRS but cover impacts on people and the environment only: they leave out financial risks and opportunities, resilience and EU Taxonomy reporting. A proposed mixed approach would let groups limit non-climate topics to EU-related impacts, while climate impacts stay global. See the revised ESRS and double materiality. See impacts, risks and opportunities. For the Taxonomy itself, see EU Taxonomy reporting.

ESRS-40a or a consolidated ESRS report?

A group with EU subsidiaries that report in their own right from 2027 often prefers a single consolidated report under the full ESRS, because it exempts those subsidiaries and meets Article 40a at the same time. A report under ESRS-40a is lighter, but it does not exempt the subsidiaries, so a group could end up preparing several reports. A group caught only at parent level, with no large EU subsidiary of its own, is more likely to use ESRS-40a. The decision affects systems, assurance and cost, so it is worth making early. See ESRS E1 on climate change.

Does the Article 40a report need assurance?

Yes. The report must be published with an assurance opinion from a person or firm authorised to give one under the law of a member state or of the parent's country. Limited assurance is the level required across the CSRD after the Omnibus. See sustainability assurance explained.

What should non-EU groups do now?

Measure EU net turnover for each year from 2026, list EU subsidiaries and branches with their turnover and employees, check how each member state has transposed the Omnibus I Directive by its 19 March 2027 deadline, and decide between a consolidated ESRS report and ESRS-40a. Groups already reporting under IFRS S2 or California's laws can reuse their emissions data, but ESRS reporting is based on double materiality, so it covers impacts as well as financial risks. See ISSB adoption by country.

This guide is general information. It is not tax or legal advice for your situation.