Simplification of the sustainability frameworks: Swiss and EU Updates

1. Key EU steps to streamline sustainability rules

1.1 Postponement of sustainability reporting and due diligence obligations

Directive (EU) 2025/794 (Stop-the-Clock Directive) entered into force on 17 April 2025 and must be transposed by Member States into national law by 31 December 2025.

The Stop-the-Clock Directive postpones sustainability reporting requirements under the CSRD by two years for companies that have not yet begun reporting. In particular:

• Large EU companies (other than those already reporting as public interest entities) and large non-EU issuers with EU-listed securities (wave 2) will now report in 2028 (instead of 2026) for the financial year 2027.
• Listed SMEs (wave 3) will now report in 2029 (instead of 2027) for the financial year 2028.
• The timeline remains unchanged for in-scope non-EU parent companies (wave 4), which are set to report in 2029 for the financial year 2028.

For the CSDDD, the Stop-the-Clock Directive postpones the transposition deadline by one year, from 26 July 2026 to 26 July 2027. As a result, the first wave of companies will need to comply with sustainability due diligence requirements from 26 July 2028 (instead of 2027).

1. 2 Substantive Simplifications to the CSRD and CSDDD

1.2.1 State of play

The so-called Omnibus I package also proposes substantive simplifications to the CSRD and CSDDD. The proposals were published by the Commission on 26 February 2025 and have since been the subject of extensive discussions at working-party and committee level. The European Parliament adopted its negotiating position on 13 November 2025, while the Council of the EU had already adopted its general approach on 23 June 2025. Trilogues between the Council, Parliament and Commission commenced on 18 November 2025. In this context, the Council has published a document (available here) setting out the initial position of each of the three institutions.

1.2.2 Proposed simplifications to the CSRD

Amongst other key simplifications, the EU co-legislators are notably considering introducing a so-called "value chain cap" limiting the sustainability information that an in-scope company may request from value-chain partners with fewer than 1'000 employees, reporting carve-outs for commercially sensitive information, and the removal of a planned future uplift from limited to reasonable assurance.

Most significantly, the EU institutions are contemplating higher scoping thresholds for determining whether a company falls within the scope of CSRD. In particular, the proposals envisage entirely excluding listed SMEs and raising the employee threshold from the currently 250 employees to 1'000 employees (Commission and Council) or 1'750 employees (European Parliament). They also consider replacing the existing financial thresholds – currently set at either EUR 50 million net turnover or EUR 25 million in balance sheet total – with a single, significantly higher threshold of EUR 450 million in turnover (though the Commission proposes retaining the current financial criteria).

The Omnibus package also proposes narrowing the scope for non-EU parent companies (such as Swiss parent companies). Under the Council's general approach (aligned with Commission's proposal), a non-EU parent would be captured if it meets two criteria: (i) a net EU turnover exceeding EUR 450 million (up from EUR 150 million under the current rules) and (ii) either (a) a large EU subsidiary (existing definition applies)  or (b) an EU branch with turnover exceeding EUR 50 million (up from EUR 40 million currently). By contrast, the European Parliament proposes a simpler test based only on whether a non-EU parent company's EU subsidiary or branch has a global turnover exceeding EUR 450 million. Both proposals will lead to a significant reduction of Swiss in-scope parent companies.

In addition, the Commission intends to simplify the European Sustainability Reporting Standards (ESRS) by reducing the number of data points, clarifying requirements and improving consistency, with sector-specific standards no longer mandated, while preserving the double materiality principle (the simplified draft ESRS prepared by EFRAG and submitted to the Commission on 3 December are available here).

1.2.3 CSDDD

As regards the CSDDD, the trilogue negotiations are expected to focus, in particular, on:

• increasing the scoping thresholds (Council and Parliament, but not the Commission): In-scope companies would include EU companies exceeding both (i) EUR 1.5 billion in worldwide turnover (up from EUR 450 million) and 5'000 employees (up from 1'000 employees), and non-EU companies exceeding EUR 1.5 billion turnover in the EU (up from EUR 450 million);
• softening the obligation to adopt and put into effect a transition plan (Commission and Council) or potentially removing the mandatory transition plan requirement entirely (European Parliament);
• limiting the obligation to conduct supply chain due diligence primarily to direct suppliers ("tier 1") (Commission and Council) or adopting a risk-based approach (European Parliament), rather than requiring diligence across the entire value chain;
• removing the harmonized civil liability regime and softening the penalty regime: The Commission proposes to remove the minimum of the maximum fine cap (currently set at 5% of a company’s global turnover), while the Council and Parliament suggest setting the 5% cap as the maximum fine (meaning that Member States cannot go above this cap).

1.2.4 Next steps

The trilogue negotiators aim to reach an agreement by the end of this year. Subsequently, the agreed text will still need to be formally adopted by the EU co-legislators and transposed into national law by the Member States.

2. Recent Swiss sustainability developments

2.1 Pause of Swiss sustainability reforms

To ensure international alignment and reduce regulatory burdens, the Swiss government has decided to synchronize its sustainability reforms with the ongoing EU legislative work.

On 21 March 2025, following a consultation that revealed controversial feedback and widespread calls for simplification, the Federal Council decided to pause the revision of sustainability reporting rules in the Swiss Code of Obligations, which aimed to align these rules with the CSRD.

On 25 June 2025, the Federal Council further paused the revision of the Climate Reporting Ordinance – with a suspension lasting at least until 1 January 2027 – pending decisions on the broader reporting reform and clarity on the EU's  simplification efforts.

In September 2025, the Swiss government also decided to respond to the popular "Responsible Business Initiative II" by proposing an indirect counterproposal that will address both sustainability reporting and corporate sustainability due diligence. This counterproposal is expected to remain aligned, but not exceed, the simplified provisions of the EU. The consultation draft is expected by end of March 2026.

​​​​​​​​​​​​​​2.2 SIX Swiss Exchange – Temporary suspension of the "opt-in" sustainability reporting regime

On 3 December 2025, SIX Exchange Regulation announced a temporary suspension of its voluntary "opt‑in" sustainability reporting regime for issuers listed on SIX Swiss Exchange. This option, which the exchange had offered to issuers since 2017, allowed issuers to voluntarily disclose their sustainability reports in accordance with internationally recognized standards (such as GRI or ESRS) and to notify this to the Swiss exchange.

Issuers remain, of course, free to publish voluntary sustainability reports, but will no longer be able to reference a SIX "opt‑in" regime. Swiss issuers that qualify as large public interest entities and are therefore subject to the mandatory sustainability reporting requirements of the Swiss Code of Obligations, must naturally continue to comply with these rules. 

Whilst it is doubtful that SIX's suspension decision will make issuers shift their sustainability reporting approach entirely, it may provide some relief to those struggling with full alignment to evolving standards or those gearing up towards ESRS compliance. This could also offer some breathing room to allow issuers to focus on the critical task of preparing for legally required disclosures, rather than continuing to invest in voluntary frameworks that could soon become redundant or misaligned with future regulations.

3. Preparedness

The current pause and re-evaluation of sustainability reporting regimes in both the EU and Switzerland present a window of opportunity for internal preparedness. Although the EU's revised timelines offer temporary relief, sustainability reporting and corporate sustainability due diligence obligations can remain challenging to navigate, especially given the uncertainty around the final scope, the exact regulatory requirements, and the effort needed to comply.

With these variables still in flux, proactive, strategic planning is essential, both at the executive and board level. By aligning internal processes and resources with both known and anticipated mandatory requirements, companies can be better positioned to respond swiftly once the full scope becomes clear. 2026 will be pivotal for that.

Please do not hesitate to contact us in case of any questions.

Legal Note: The information contained in this Smart Insight newsletter is of general nature and does not constitute legal advice.