The number of companies remaining in the scope of the EU’S Corporate Sustainability Reporting Directive (CSRD) following the European Commission’s Omnibus simplification initiative will fall to approximately 1,200 from around 10,000, according to European Financial Reporting Advisory Group (EFRAG).
EFRAG also announced that it has resumed work on the sustainability reporting standard development for non-EU groups (N-ESRS), with plans to release its draft standard for consultation in mid-July. EFRAG has been mandated by the European Commission with developing technical advice for the reporting standards underlying the CSRD.
The resumption of EFRAG’s work on the N-ESRS follows its development of an exposure draft of the standard in early 2025, with work on the standard subsequently stopped in light of anticipated changes to the CSRD from the Omnibus process, launched by the Commission in February 2025, and aimed at significantly reducing the sustainability reporting and regulatory burden on companies.
Under the initial CSRD regulation, non-EU companies within the scope of the CSRD included those with revenues greater than €150 million, and with an EU-based subsidiary or branch with revenues of €40 million. The Omnibus process revised the scope to only include companies with net revenue in the EU greater than €450 million for two consecutive years, and with an EU subsidiary or branch with revenues greater the €200 million.
In a presentation outlining its development work on the N-ESRS, EFRAG revealed its estimate that the new rules would reduce the number of non-EU companies in the CSRD scope by around 88%, to approximately 1,200.
By country, EFRAG estimated that approximately 350 – 450 U.S. companies would remain in the scope of the CSRD, alongside 150 – 200 UK companies, 100 – 150 companies from Switzerland and Japan, and 30 – 80 companies from other jurisdictions.
EFRAG also noted that the upcoming draft standard will focus reporting requirements for non-EU companies on their sustainability-related impacts, as opposed to the standard for EU companies (ESRS), which requires disclosures on impacts, as well as on risks and opportunities. Similar to the ESRS, the N-ESRS will encompass 12 standards – such as general requirements, general disclosures, climate change, pollution, water, etc. – and four reporting areas including governance, strategy, impact management through policies and actions, and metrics and targets.
EFRAG said that it is inviting companies to express their interest in participating in a dedicated field test of the exposure draft once it is released, with plans to have the consultation run for 100 days, and to submit its technical advice on the N-ESRS to the EU Commission in January 2027.
