N-ESRS Returns to the Agenda
EFRAG has resumed development of the European Sustainability Reporting Standard for Non-EU Groups, with consultation and field testing set to shape key decisions on scope, interoperability, and implementation.
After a temporary pause during the ESRS simplification process, EFRAG has resumed work on the European Sustainability Reporting Standard for Non-EU Groups (N-ESRS). The framework is being developed for certain non-EU companies with significant business activities in the European Union. Following recent legislative changes through the Omnibus package, EFRAG is revisiting the framework before moving forward with public consultation.
The revised scope is significantly narrower than originally contemplated. Under the updated thresholds, reporting will apply to non-EU groups generating more than €450 million of net turnover in the EU over two consecutive years and that either operate a large EU subsidiary or an EU branch generating more than €200 million in annual turnover. EFRAG’s preliminary estimates suggest that these changes reduce the number of companies expected to be in scope from approximately 10,000 under the original framework to roughly 1,200 following the Omnibus revisions. The remaining in-scope population will likely be concentrated primarily in the United States (350-450 companies), the United Kingdom (150-200), and Switzerland and Japan (100-150 each), with most other non‑EU jurisdictions contributing fewer than 50 companies each.
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EFRAG’s renewed activity marks the next phase of development for the N-ESRS. As part of that process, EFRAG has published an unapproved exposure draft, providing stakeholders with an early view of the proposed requirements ahead of the formal public consultation. The draft confirms EFRAG’s impact-focused approach, removing disclosures related to risks and opportunities, financial effects, resilience, and dependencies while retaining the overall ESRS architecture.
EFRAG expects to launch a public consultation in the second half of 2026 and deliver technical advice to the European Commission in early 2027, with the framework currently expected to apply to reporting for financial year 2028, with first reports published in 2029. Current efforts are focused on finalizing the exposure draft and consultation package while reassessing elements of the standard in light of changes introduced through the EU’s broader sustainability reporting simplification agenda.
A Distinct Reporting Framework for Non-EU Groups
N-ESRS will differ in important ways from the reporting framework applicable to EU undertakings. Rather than replicating the full ESRS architecture, the current draft uses the ESRS as a foundation while focusing on impact materiality. As a result, disclosures related to financial materiality – including risks and opportunities, financial effects, resilience, and dependencies – have largely been removed. EFRAG notes, however, that financial information may still be included where necessary to provide context for sustainability impacts. The overall structure remains familiar, retaining 12 standards comprising two cross-cutting standards and ten topical standards. Disclosures are organized around four reporting areas: governance, strategy, impact management through policies and actions, and metrics and targets.
Beyond the disclosure content itself, EFRAG is examining how multinational groups already reporting under IFRS Sustainability Disclosure Standards could leverage existing disclosures to meet N-ESRS requirements. The June 2026 materials discuss the potential use of incorporation by reference and identify areas of overlap between IFRS S1, IFRS S2, and N-ESRS. At the same time, EFRAG identifies several areas where additional N-ESRS disclosures may still be required, including information on locked-in emissions, renewable and non-renewable energy use, compatibility with a 1.5°C pathway, GHG removals, biogenic emissions, and activities involving fossil fuels.
EFRAG is also considering how EU-specific legal and regulatory concepts can be adapted for a global reporting audience. Because many ESRS requirements rely on references to EU legislation, the organization is exploring a combination of internationally recognized references, incorporation of key technical concepts directly into the standards, and flexibility for companies to rely on local legal frameworks where appropriate. The objective is to balance technical consistency with global applicability and acceptance.
A related discussion concerns the reporting perimeter itself. EFRAG is evaluating alternative reporting architectures for non-EU groups, including a “mixed approach” under which climate information would be reported at the global group level while disclosures on other sustainability topics could be limited to EU-related impacts. This approach is intended to balance the global nature of many climate impacts with the EU-specific reporting objectives of the N-ESRS framework.
N-ESRS Timeline: Consultation, Testing, and Adoption
The next major milestone is the release of the N-ESRS Exposure Draft for public consultation, which EFRAG currently expects to take place in the second half of July 2026. EFRAG has indicated that the consultation will remain open for approximately 100 days and will seek stakeholder input on four key topics: the content of the standards, the treatment of EU legal references in a global reporting framework, the proposed mixed reporting approach, and interoperability with IFRS Sustainability Disclosure Standards.
Running in parallel with the public consultation, EFRAG has launched a field test for preparers, with interested companies able to register until 1 July 2026. Unlike the broader consultation process, which seeks stakeholder views on the proposed framework, the field test is designed to assess its practical operability by having participating organizations simulate the preparation of selected disclosures. Feedback will be gathered through surveys, interviews, and workshops and will help inform EFRAG’s final technical advice to the European Commission.
Following the consultation period, EFRAG expects to deliver technical advice to the European Commission in January 2027, with adoption of the final standard currently anticipated in mid-2027, subject to the European Commission’s review, finalization, and adoption process. Feedback received through both the consultation and field-testing processes is expected to play an important role in shaping the final framework.
Preparing for N-ESRS Compliance
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