Sweden's Seventh AP Fund (AP7) has urged the European Financial Reporting Advisory Group (EFRAG) to remove the “mixed approach” from its proposed ESRS 40a sustainability reporting standard, arguing that it could make company disclosures harder to compare.

While broadly backing the proposed rules, AP7 said a more consistent reporting framework was needed to enable investors to compare companies and assess their global impacts.

The proposed ESRS 40a standard, developed by EFRAG at the request of the European Commission (EC), aims to provide investors and other stakeholders with relevant sustainability information without creating excessive reporting requirements.

EFRAG said the objective of ESRS 40a reporting is to ensure a “level playing field” for European Union (EU) market operators and transparency regarding how non-EU undertakings with significant EU activities impact people and the environment.

In response to EFRAG’s consultation on the new standard, AP7 broadly supported the proposal, while arguing the option to apply a “so-called mixed approach” should be removed.

AP7 said that under the mixed approach, “companies could limit their reporting to EU-related impacts in certain sustainability areas, while reporting globally in others”.

It argued this risks making sustainability reports “more difficult to compare”, while providing “an incomplete picture” of companies’ impacts across global value chains.

The pension fund said it would also result in different reporting requirements for EU-based and global companies, both of which have significant operations or sales in the EU.

The EFRAG consultation closed at the end of October 2026. EFRAG said the consultation feedback will contribute to the finalisation of EFRAG's technical advice to the EC.

Reporting under the ESRS 40a standard will become mandatory for financial years beginning on or after 1 January 2028.

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