Japan Comments on the ESRS-40a Draft
Overview
The Japanese government issued a comment letter dated October 28, 2026, on the draft European Sustainability Reporting Standards for non-EU companies (ESRS-40a), published by EFRAG on July 23, 2026. The letter proposes clarifying the additional disclosures specific to ESRS-40a so companies can refer to reports prepared under standards functionally aligned with ISSB standards. It also proposes considering a simpler alternative to the mixed approach that could reduce reporting burdens while reporting EU-related impacts.
Key points
- The Japanese government issued a comment letter dated October 28, 2026.
- The letter proposed clarifying additional disclosures specific to ESRS-40a so companies can refer to reports based on standards functionally aligned with ISSB standards.
- The letter proposed considering a simpler alternative to the mixed approach that could reduce burdens while reporting EU-related impacts.
Overview
The European Financial Reporting Advisory Group (EFRAG) published the draft European Sustainability Reporting Standards for non-EU companies (ESRS-40a) on July 23, 2026.
The Japanese government's comment letter welcomes the draft's incorporation of the use of ISSB standards and the mixed approach, and makes additional proposals to improve the effectiveness of both and help reduce the practical burden on non-EU companies.
Details
The first proposal is to clarify additional disclosures specific to ESRS-40a, enabling non-EU companies to refer in their ESRS-40a sustainability reports to reports based on standards functionally aligned with ISSB standards.
The second proposal is to consider introducing a simpler alternative approach to the draft's mixed approach, enabling non-EU companies to reduce reporting burdens while reporting EU-related impacts.
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