Contact us

      Sustainability reporting and assurance are evolving rapidly. The new requirements under the Corporate Sustainability Reporting Directive (CSRD) in the EU, national regulations in Switzerland (Swiss CO) and rising expectations from institutional investors are accelerating this shift. Capital markets and customers increasingly expect transparent sustainability disclosures.

      For Swiss companies – particularly those with EU exposure or international supply chains – this makes sustainability reporting a strategic priority. It directly affects market access, financing conditions and corporate reputation, making it a core element of risk management and corporate positioning rather than a mere compliance exercise.

      This page provides a structured overview of today’s sustainability reporting landscape. It clarifies reporting obligations, explains how double materiality assessments translate into measurable KPIs and highlights key insights from the EU Taxonomy. It also outlines how companies can build scalable, digital and assurance-ready Environment, Social and Governance (ESG) reporting processes.

      Our objective is to offer in-depth insights, expert guidance and practical recommendations to help you strengthen and future-proof your non-financial reporting.

      Explore our services

      The ESG reporting landscape

      Sustainability reporting obligations remain fragmented and continue to evolve.

      EU legislation – particularly the CSRD and the European Sustainability Reporting Standards (ESRS) – together with Swiss requirements and international frameworks such as GRI SRS and SASB, increasingly overlap and shape capital market expectations.

      This overview clarifies which standards apply, who is affected and how the various ESG reporting frameworks interact within today’s broader reporting landscape.

      CSRD & ESRS

      The CSRD sets out the new EU requirements for ESG reporting. It expands the scope of affected companies, standardizes sustainability disclosures through the ESRS, the underlying ESG reporting framework of the CSRD, and introduces mandatory external assurance for sustainability statements.

      The EU Omnibus package, introduced in February 2025, postponed timelines for certain companies (Stop-the-clock Directive) and narrowed the overall CSRD scope by raising applicability thresholds (Content Directive).

      In parallel, EFRAG has been developing simplified ESRS to reduce implementation complexity. The ESRS define the structure, depth and content of ESG disclosures under the CSRD.

      The revised ESRS, currently in draft form, are expected to apply from the 2027 reporting year, with optional early adoption from 2026.

      Under the CSRD, sustainability information must be included in the management report and aligned with the annual report to ensure consistency between financial and ESG disclosures.

      Although the CSRD is an EU Directive, it has significant ESG reporting implications for companies outside the EU. This includes Swiss companies with EU exposure, whether through subsidiaries, substantial revenues or integrated supply chains.
       

      Further reading:

      EU Taxonomy

      The EU Taxonomy is closely linked to CSRD requirements. It serves as the EU’s classification system for environmentally sustainable economic activities, providing clear criteria to determine when an activity is considered environmentally sustainable and taxonomy aligned.

      The regulation is complex and introduces new investor-relevant KPIs, requiring specialized expertise. Effective taxonomy reporting depends on multidisciplinary knowledge, adapted systems and sector-specific data. Timely updates to processes and systems are critical for the taxonomy assessment of corporate activities. Early involvement of auditors is also recommended, as the CSRD mandates assurance of the relevant KPIs and disclosures.

      In the 2025 reporting period, companies were required for the first time to provide comprehensive sustainability disclosures covering all six environmental objectives under Taxonomy. Initial analysis shows progress in the allocation of taxonomy-eligible and taxonomy-aligned activities. However, companies continue to face significant dependencies on supply chain data – particularly regarding carbon emissions and the technical screening criteria.

      EU Taxonomy disclosures

      EU Taxonomy disclosures

      Insights into the EU Taxonomy disclosures for the financial year 2024 of 275 European non-financial undertakings
      Download the study

      Swiss ESG reporting

      With the revised Swiss Code of Obligations (Swiss CO), Switzerland introduced reporting and due diligence obligations on non-financial matters. Public-interest companies that exceed certain thresholds in terms of full-time employees, revenue or total assets have been subject to these requirements since the 2023 financial year.

      They must report annually on environmental and social matters, employee-related issues, respect for human rights and combating corruption. In addition, a separate Ordinance on Climate Disclosures, effective 1 January 2024, further specifies climate-related reporting requirements and aligns with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

      Already in June 2024, Switzerland announced stricter corporate requirements, aligned with the new European CSRD, including an assurance obligation. However, following developments related to the EU Omnibus since February 2025, the revision of Swiss reporting requirements has been temporarily paused. This pause reflects Switzerland’s strategic intent to remain consistent with the evolving European regulatory framework. Additional guidance from the Federal Council is expected shortly. We will keep you updated here on further developments.
       

      Further reading:

      Get expert support on climate, energy, and nature to drive decarbonization, resilience and enable sustainable growth.
      Read more

      ISSB

      The IFRS Sustainability Disclosure Standards (IFRS S1 and S2) were developed by the International Sustainability Standards Board (ISSB) and published in 2023 to establish a global baseline for sustainability-related financial reporting. Their objective is to support investor decision-making and improve comparability of disclosures across companies and jurisdictions.

      Adoption depends on jurisdictions formally endorsing the standards; until then, reporting under IFRS S1/S2 remains voluntary where they are not mandated.

      IFRS S1 sets out the general requirements for sustainability-related financial disclosures. It explains how companies should identify, describe and present material sustainability risks and opportunities that could reasonably be expected to affect their prospects.

      IFRS S2 is a topic-specific standard focusing on climate-related disclosures. It builds on the requirements in IFRS S1 and applies them to climate risks, opportunities, metrics and transition planning.

      Both standards are aligned with the four pillars of the Task Force on Climate-related Financial Disclosures (TCFD):

      • Governance
      • Strategy
      • Risk management
      • Metrics and targets.

      IFRS S1 and S2 are designed to be applied together and follow a financial materiality approach, requiring companies to disclose sustainability-related risks and opportunities that may affect cash flows, financing or cost of capital.

      In contrast, the EU’s CSRD/ESRS framework uses a double materiality perspective, capturing both financial impacts on the company and the company’s environmental and social impacts.

      Despite these differences, the ISSB and EU have worked to enhance alignment, especially on climate reporting, enabling companies to leverage overlaps and reduce duplication.
       

      Further reading:

      Double Materiality Assessment

      The Double Materiality Assessment (DMA) is at the core of sustainability reporting under CSRD/ESRS.

      It is a structured process to identify and prioritize sustainability matters and connect financial materiality with a company’s actual and potential impacts on the environment and society, considering the perspectives and interests of key stakeholders.

      When applied correctly, a double materiality assessment becomes a strategic management tool – from prioritizing sustainability matters to deriving measurable KPIs for progress tracking against targets.

      Concept: Financial vs. Impact materiality

      Double materiality considers sustainability from two complementary perspectives:

      • Financial Materiality: Which sustainability-related risks and opportunities could affect the company’s financial position, financial performance, cash flows, or access to capital in the short, medium, or long term?
      • Impact Materiality: What significant positive or negative impacts does the company have on the environment and society across its entire value chain?

      A matter is considered material if it meets one or both materiality dimensions (impact materiality and/or financial materiality). The assessment must be carried out consistently and transparently and be documented in a way that is ready for assurance.

      Process: from defining the scope to validating materiality results

      A typical DMA process involves the following steps:

      • Define the scope

        Clarify organizational boundaries, objectives, timeline and governance structure. Ensure alignment with relevant regulatory and reporting frameworks.

      • Understand the business context

        Develop a comprehensive understanding of the business model, value chain activities and relevant stakeholders.

      • Identify potentially material ESG topics

        Compile a long list of potentially material ESG topics based on the context, regulatory requirements, industry standards, peer analysis, stakeholder input and internal documentation to determine which issues may be relevant to the organization and its stakeholders.

      • Identify and assess impacts, risks, and opportunities (IROs)

        ESG topics from the longlist that are clearly identified as non-material can already be excluded at this stage.

        The focus then shifts to clearly material as well as potentially material topics.

        For each potentially material ESG topic, identify actual and potential impacts, risks, and opportunities across the value chain. These IROs are assessed based on their severity and likelihood (impact materiality) as well as their financial materiality to determine overall materiality.

      • Validate and document

        Validate the DMA results, obtain formal approval of the final list of material ESG topics and related material IROs, and document the supporting evidence, assumptions and governance decisions.

      Next, the organization identifies the relevant disclosure requirements and data points based on the materiality results, thereby defining the material information for the sustainability report.

      Practical insights from the first sustainability statements in accordance with ESRS

      Initial experience shows that companies particularly benefit from the following:

      • Clear prioritization instead of overly broad topic lists.
      • Consistent derivation of KPIs from the double materiality assessment.
      • Early development of governance structures and documentation.
      • Alignment between specialist departments, management and reporting teams.

      Our analysis of 270 ESRS sustainability statements shows where companies faced the greatest implementation challenges. It also highlights which approaches have worked well in practice.

      EU Taxonomy disclosures

      Real-time ESRS Report

      Insights from 270 ESRS sustainability statements

      Download the study

      Data, digital & automation

      ESG reporting requirements are increasing. At the same time, data collection and processing are becoming more complex.

      Why a digital ESG data architecture?

      Many companies initially rely on manual, Excel-based processes for sustainability reporting. However, as regulatory requirements expand, data granularity increases and reporting cycles become more frequent, these approaches quickly reach their limits.

      Digital solutions enable structured data collection, reduce sources of error and create transparency across data flows, responsibilities and assumptions. This allows sustainability disclosures to become scalable, auditable and strategically usable beyond compliance.

      Core building blocks of a scalable reporting framework

      • Master data & governance

        Standardized definitions, clear responsibilities and consistent data models as the basis for robust ESG reporting.

      • Automated calculations

        System-supported calculation and validation of KPIs to reduce manual effort and improve data quality.

      • Workflow & evidence management

        Controlled approvals, transparent data lineage and structured documentation to create a reliable audit trail and support ESG assurance.

      Further reading & resources

      SMEs & the supply chain effect

      Although most SMEs are not directly subject to the CSRD, they are increasingly affected by rising ESG expectations. Companies in scope often rely on suppliers and business partners to provide reliable sustainability data to meet their own reporting obligations.

      At the same time, banks, customers and other stakeholders now factor ESG criteria into financing, procurement and contractual decisions, making ESG disclosures a growing de facto expectation for SMEs.

      For SMEs, the focus is not on producing comprehensive sustainability reports but on responding efficiently to ESG data requests:

      • Focus on a limited set of relevant ESG disclosures.
      • Build basic evidence for key sustainability topics.
      • Ensure consistent data quality over time.

      This approach allows SMEs to respond effectively to stakeholder requests without creating a disproportionate administrative burden.

      Those wishing to go further can adopt voluntary frameworks, such as the Voluntary Sustainability Reporting Standard for SMEs (VSME), which provides a simplified, consistent ESG reporting structure commonly requested by business partners, banks and investors.

      Importantly, as part of the Omnibus procedure, companies within the value chain with up to 1,000 employees are protected from excessive ESG information requests.

      The voluntary VSME reporting standard, expected to be adopted by the European Commission in 2026, will serve as a “value chain cap”, allowing companies to refuse requests that go beyond its scope. The standard will build on the existing VSME framework.

      ESG Assurance

      Under regulations such as the CSRD, sustainability disclosures must undergo external review with limited assurance. Companies are responsible for ensuring that all sustainability information is consistent, traceable, and reliable – from data collection through to external assurance.

      Limited vs. Reasonable Assurance

      External ESG assurance is currently most commonly performed with limited assurance. This level confirms that no matters have come to the auditor’s attention indicating material misstatements.

      Reasonable assurance goes significantly further and requires more extensive audit procedures, similar in depth to those performed in financial statement audits.

      ESG assurance engagements are typically conducted under ISAE 3000 (for non-financial information), supplemented by ISAE 3410 for greenhouse gas and carbon emissions disclosures.

      The appropriate level of assurance depends on the maturity of the reporting as well as the applicable regulatory requirements.

      Internal controls & audit trail

      Assurance-ready sustainability reporting requires robust internal structures – clear governance and defined responsibilities, transparent data lineage, structured evidence management, consistent documentation across reporting periods and strong internal controls.

      Together, these elements enhance the reliability of ESG disclosures and support higher assurance levels over time. Digital solutions are increasingly able to support assurance readiness. Automated documentation and system-supported workflows simplify both reporting and assurance processes.

      Further reading & resources

      EU Taxonomy disclosures

      KPMG ESG Assurance Maturity Index 2025

      Maintaining momentum
      Download the study

      How ESG reveals structural weaknesses in today's risk management - and what to do about it
      Read more

      Support for ESG Reporting & Assurance

      Our experts provide guidance on national and international sustainability reporting requirements and standards (e.g., CSRD/ESRS, EU Taxonomy, Swiss CO, ISSB, GRI SRS) and deliver ESG assurance services.

      We help you build a robust reporting practice and prepare assurance-ready disclosures that meet both current and future stakeholder expectations.

      Explore our ESG Reporting & Assurance Services

      FAQ – Frequently asked questions on ESG Reporting & Assurance

      The CSRD applies to certain listed companies and large companies in the EU, including EU companies with more than 1,000 employees and over EUR 450 million in net turnover. It also applies to non-EU parent groups with a significant EU presence, defined as generating more than EUR 450 million in net turnover within the EU and having an EU subsidiary or branch with more than EUR 200 million net turnover.

      In the ESRS context, double materiality means that companies must report both how sustainability matters affect their financial performance (financial materiality) and how the company’s activities impact people and the environment (impact materiality). A topic is considered material if it matters under one or both perspectives.

      A sustainability report should provide a clear, transparent and data-driven overview of a company’s most material ESG topics, how these are managed and how they link to the overall strategy. It should outline governance structures, policies, actions, measurable targets and performance results, including progress over time.

      Overall, an effective sustainability report demonstrates accountability by showing what matters most, what actions are being taken and what results are being achieved. The specific disclosure requirements and content of the report depend on the applicable reporting standards and legal framework.

      Sustainability reporting is not just about compliance – it helps companies identify risks and opportunities, align ESG factors with business priorities and unlock long-term value. Effective reporting can improve operational efficiency, build stakeholder trust and support better decision-making.

      By linking ESG performance to business goals, companies can strengthen competitiveness, enhance resilience and use sustainability as a driver of lasting value.

      Swiss companies require ESG assurance mainly if they fall under the EU’s CSRD, as the CSRD mandates limited assurance from the first reporting year. Under the current Swiss Code of Obligations (Article 964a–c CO), assurance on non-financial reports is not mandatory.

      However, many companies obtain voluntary assurance to strengthen credibility, increase stakeholder trust, reduce reputational risk and improve the quality and reliability of their sustainability reporting.

      If Swiss regulation were to align more closely with EU regulation in the future, assurance on non financial reporting is likely to become mandatory in Switzerland as well.

      The key difference lies in the level of confidence that a reader can place in the report. Reasonable Assurance is the equivalent to an audit opinion over financial information.

      The conclusion is expressed in a positive form, stating that the non-financial disclosures are materially accurate and give users of sustainability information a high degree of confidence in the accuracy and reliability of the reported data.

      Limited Assurance, on the other hand, provides a lower, yet still meaningful, level of confidence. It follows the same methods as Reasonable Assurance but is less comprehensive in nature, timing and extent of procedures.

      XBRL (eXtensible Business Reporting Language) is a standardized digital format used to prepare and exchange business and financial information. It allows companies to tag specific data points in their reports so that the information can be read and processed automatically by software.

      For ESRS statements, XBRL tagging ensures that reported information is standardized, comparable and easy for regulators and stakeholders to analyze electronically. 

      Even when they are not directly subject to reporting obligations, SMEs increasingly face ESG data requests from supply chain partners, customers and financing institutions. Larger companies need sustainability information to meet their own regulatory and disclosure obligations.

      As a result, suppliers may be asked to provide ESG data, which can create additional effort but also offers opportunities: strong ESG performance can improve competitiveness, strengthen business relationships and facilitate access to financing.

      Meet our experts

      Silvan Jurt
      Silvan Jurt

      Partner, Head Corporate Sustainability Services

      KPMG Switzerland

      Cyrill Kaufmann
      Cyrill Kaufmann

      Partner, Audit & Corporate Sustainability, Head ESG Assurance

      KPMG Switzerland

      Theresa Tiersch
      Theresa Tiersch

      Director, Corporate Sustainability Services

      KPMG Switzerland

      Related articles and more information

      Helping you build a sustainable future for your business.
      Read more

      Companies worldwide are preparing for the advent of mandatory reporting on sustainability, according to the 2024 edition of KPMG’s Survey of Sustainability Reporting.
      Read more

      Switzerland is tightening and expanding non‑financial reporting, bringing more companies under stricter, audited sustainability rules.

      Read more

      The EU Omnibus Package streamlines sustainability rules, easing reporting burdens and reshaping CSRD/CSDDD with implications for Swiss companies.

      Read more