Revision of the Swiss Sustainability Reporting Framework: New Requirements for Companies

1. Background

On 26 June 2024, the Swiss Federal Council initiated a public consultation on a draft bill to amend the current non-financial reporting obligations for companies in Switzerland. On 6 December 2024, a consultation on the revision of the Climate Reporting Ordinance, which has been in force since 1 January 2024, followed. The proposed amendments aim to align Swiss regulations with the EU Corporate Sustainability Reporting Directive (CSRD).

The draft bill significantly broadens the scope of companies required to prepare sustainability reports. The new non-financial reporting obligations, outlined in articles 964a et seq. of the Swiss Code of Obligations (CO), as well as the revised Climate Reporting Ordinance, are expected to come into force on1 January 2026, subject to parliamentary approval and a potential referendum.

2. Key Revisions at a Glance

Expanded Scope:

The Draft Bill proposes that publicly traded companies (article 727 CO) and FINMA-supervised companies remain within the scope, but without the size thresholds that previously applied. In addition, economically significant companies (cf. CSRD: large undertakings) – defined as those exceeding two of the following three thresholds in two consecutive financial years – will also be subject to the new rules (rev. article 964a CO; cf. article 727 para. 2 CO):

• balance sheet total of CHF 25 million;
• annual net turnover of CHF 50 million;
• 250 full-time equivalents (employees) on annual average.

Unlike the CSRD, the Swiss requirements do not include provisions for third-country companies (no extraterritorial reach). The Federal Council estimates that approximately 3,500 companies will fall directly under the new reporting obligations. Another 3,000 to 14,000 companies may be indirectly affected, for example, as suppliers to large corporations. This number could rise to 50,000 with the introduction of the CSRD.

Enhanced Disclosure Obligations:

Compared to the current law, the draft bill expands and clarifies the scope of sustainability information that must be disclosed. Companies will be required to report on a wide range of environmental, social (including human rights), and governance (ESG) matters (rev. article 964c para. 1 CO).

As under current law, but now formulated more clearly in the law, the reporting must be based on the principle of double materiality: companies must transparently address both the risks they face (“outside-in”) and the impacts of their activities on ESG issues (“inside-out”; rev. article 964c para. 1 CO).

Recognized Reporting Standard:

Sustainability reports must adhere to a recognized standard. Companies can choose between the European Sustainability Reporting Standards (ESRS) and other standards deemed equivalent by the Federal Council, such as the ISSB standards. This replaces the current reliance on TCFD recommendations under the Climate Reporting Ordinance.

Audit Requirements:

Sustainability reports will need to be audited by an external auditor or an accredited conformity assessment body.

Transition Plan for Net-Zero Goals:

Companies will be required to develop transition roadmap plans that outline their strategies for achieving net-zero emissions by 2050. These plans must include science-based targets for reducing significant greenhouse gas emissions and align with Switzerland’s overall climate objectives.

3. EU Developments and Impact on Swiss Regulations

In parallel with Switzerland’s efforts to revise its sustainability reporting framework, the European Commission has proposed an ‘omnibus’ package aimed at significantly reducing sustainability reporting requirements for companies. The key elements of this proposal include:

• CSRD: The scope of the CSRD is set to be reduced, covering only companies with more than 1,000 employees and a turnover of over EUR 50 million or a balance sheet total of over EUR 25 million (previously: companies with more than 250 employees and a turnover of over EUR 40 million or a balance sheet total of over EUR 20 million). This change would exempt an estimated 80% of companies from the reporting requirements. Additionally, voluntary standards are planned for smaller companies.
• Corporate Sustainability Due Diligence Directive (CSDDD): The application of the CSDDD is to be postponed by one year to July 2028 for large companies. Furthermore, due diligence obligations will be restricted to direct business partners, unless plausible information is available about negative impacts further down the value chain. Additionally, the frequency of monitoring the effectiveness of due diligence measures will be reduced from annually to every five years.
• EU Taxonomy: The EU taxonomy will only be mandatory for companies with a turnover of more than EUR 450 million (previously: application to all companies covered by the CSRD),
• Carbon Boarder Adjustment Mechanism: A new threshold will be introduced that excludes 90% of importers from the scope of the ordinance (previously: no specific threshold for importers),

These proposals will be submitted to the EU Council and Parliament and will enter into force following an agreement between these bodies. If adopted, the reduction in CSRD requirements may influence Switzerland’s final implementation of its own sustainability reporting framework, given its intent to align with EU regulations.

4. Outlook

The revision of the Swiss sustainability reporting framework underscore Switzerland’s commitment to aligning with international standards and EU regulations. However, several aspects of the draft bill remain open, leaving the Federal Council to address these details at a later stage. This approach is reasonable, given the numerous moving targets currently in play regarding the sustainability reporting requirements in both the EU and Switzerland. Further, it remains to be seen what impact the implementation of the CSRD by the EU member states in their domestic laws will have on these developments.

What is clear, however, is that the proposed requirements in Switzerland will demand significant efforts from companies, especially those not already preparing for CSRD/ESRS-aligned disclosures. This includes comprehensive data collection and analysis, alongside potentially high costs. Additionally, companies will need to stay informed about further developments at the EU level, as the final scope and requirements of the CSRD and the CSDDD may further impact their obligations under Swiss law.

If you have any questions and/or comments, your contact persons at MLL Legal will be happy to assist you.

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This article does not constitute legal advice. It merely expresses the authors’ current understanding of the legal issue under discussion, without taking individual circumstances into account. Any liability for the contents of this article is excluded. Furthermore, MLL Legal is under no obligation to inform readers of this article about changes in legislation, new case law, changes in practice or other changes.