The CSRD also extends the reporting obligation to groups from third countries that conduct significant business within the Union. Following the changes introduced by the Omnibus Package, this applies to groups with EU revenue exceeding 450 million euros. Their EU subsidiaries or branches will publish a report on the group’s overall impact on people and the environment. The first reports will cover the 2028 fiscal year. The content of these reports will be defined by the ESRS-40a standard. EFRAG published a draft of this standard in July 2026 for consultation, which will run through October 31, 2026.
At the request of the European Commission, the draft includes an option called the „mixed approach.” A non-EU entity would report its climate impact on a global scale, while in other areas it could limit its reporting to „EU-related” impacts. These would include the impacts of products sold on the EU market and activities conducted within the Union. This solution raised serious concerns within EFRAG, as noted in the consultation documents. Piotr Biernacki, a member of the EFRAG Sustainability Reporting TEG, voted against adopting the draft for consultation precisely because of the mixed approach.
The most important argument is a level playing field. EU companies must report all material revenues of their groups, regardless of where they are generated. Competitors from outside the EU could omit information that is least favorable to them—such as violations of labor rights or environmental damage in countries whose products do not enter the EU. As a result, they would fare better in ESG ratings and in assessments by customers and investors, while consumers in the EU would receive an incomplete picture of their impact on people and the environment.
We also note that the regulations lack a legal basis for such a solution. The directive requires a group-wide report, and the Omnibus Package merely changed the thresholds, not the scope of the report. In our view, a standard adopted by way of a delegated act cannot narrow this scope. Furthermore, the mixed approach is inconsistent with the CSDDD, which does not limit due diligence to Union-related flows.
We also draw attention to the practice. A report that by design omits some significant impacts does not provide an accurate picture of the group. Since each group could choose the scope of reporting separately for individual topics, the reports would be difficult to compare both with one another and with those of EU companies. An auditor would not be able to verify which products sold through successive intermediaries reached the EU market, nor whether the classification of employees, production changes, or suppliers as „EU” or “non-EU” corresponds to reality. The impact on human rights and the environment does not stop at borders, and pollution spreads regardless of which market a facility serves.
In the event that this option is retained, we propose minimal solutions. All topics related to people and the environment should be reported on a global basis. This option should only be used for impacts that can be geographically limited. Companies using this option should disclose the scale of the excluded activities and a description of the excluded material impacts.
The published document contains the full text of the response sent to EFRAG in English.
We invite you to read this article. If you would like to discuss any of the topics covered—for example, in the context of relationships with business partners outside the EU—we are here to assist you.
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