Implications of EU ESG reporting requirements

Latest: EU Omnibus amendments agreed and revised ESRS now final

The EU has reached an agreement on major amendments to the CSRD. Most notably, the agreement raises the scoping thresholds significantly reducing the number of companies subject to the reporting requirements.

Following its publication in the Official Journal of the European Union, Member States will have 12 months to transpose the revised rules into national law, likely by March 2027.

Even more recently, on 3 July 2026, the European Commission (EC) has adopted the revised European Sustainability Reporting Standards (ESRS). The final revised ESRS are largely aligned with the text previously consulted on by the Commission based on EFRAG’s technical advice and provide companies with greater clarity on the applicable reporting requirements. The revised standards will become mandatory for reporting periods starting in 2027, with optional early adoption from 2026.

While the revisions reduce and streamline mandatory datapoints and clarify certain concepts, companies should not assume a proportionate reduction in implementation effort, as core reporting processes, data quality expectations and assurance readiness remain substantial. For more details on the revised ESRS, read here.

Cyrill Kaufmann

Partner, Audit & Corporate Sustainability, Head ESG Assurance

KPMG Switzerland

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Overview of the CSRD

The CSRD, originally adopted in January 2023, marked a major expansion of EU sustainability reporting requirements – both in terms of the number of companies in scope and what those companies must report.

Under the Non-Financial Reporting Directive (NFRD), fewer than 12,000 companies had to report. Under the CSRD, that number was expected to rise to nearly 50,000 companies within the EU alone. One of the key provisions of the CSRD requires in-scope companies to report sustainability information using the ESRS.

However, this significant overhaul of EU sustainability reporting raised concerns about complexity and the potentially disproportionate burden placed on companies. In response, the EC introduced an Omnibus package of proposals in February 2025.

Now that the main legislative elements have been agreed, the CSRD landscape has been substantially streamlined – giving companies more clarity and confidence to advance their reporting strategies.

The Omnibus package introduced pivotal changes, most notably a major recalibration of CSRD scoping thresholds. Under the revised rules, only the largest EU-based companies (estimated to around 10,000) and non-EU parent companies with a significant EU presence will fall within scope.

Applicability for Swiss companies

Although the CSRD is an EU Directive, it has considerable ESG reporting implications for non-EU companies, as it not only applies to EU companies or groups (i.e., a company and its subsidiaries on a consolidated basis) but also to non-EU parent groups that meet the following criteria.

General scoping:
Individual EU companies (or groups/subholdings) that meet both the following criteria on their balance sheet date:

An average of 1,000 employees during the fiscal year; and
more than EUR 450 million in revenue.

Non-EU parent company scope:
Separately from the general scoping described above, a non-EU parent company must prepare global group-level sustainability reporting if it meets both of the following conditions:

At least EUR 450 million in revenue generated in the EU for each of the last two consecutive financial years; and
at least: (a) an EU subsidiary with more than EUR 200 million in revenue in the preceding financial year, on its balance sheet date; or (b) an EU branch with more than EUR 200 million revenue in the preceding financial year.

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For an ultimate non-EU parent company that falls under the CSRD, the required reporting would cover the entire group from the parent company’s perspective.

However, these companies would apply a separate set of disclosure standards, the ESRS for certain Non-EU Undertakings (ESRS-40a). The disclosure requirements under this standard are expected to be somewhat lighter than those under the general scope (ESRS).

Importantly, any EU subsidiary that meets the thresholds for the general scope must still comply with the ESRS requirements that apply to EU-based companies, even if the parent company reports under the ESRS-40a. The ESRS-40a are not expected to be available before late 2027, following delays in their development due to the prioritization of the revised ESRS.

This is expected to leave non-EU groups with relatively little time to prepare for their first reporting year (FY2028, with reports published in 2029).

Reporting exemptions

These are the exemptions available under the CSRD:

Financial holding company scope exclusion. The CSRD excludes certain EU and non-EU financial holding companies from consolidated CSRD reporting.

This applies only to companies that meet the definition of a financial holding company, defined as a company whose sole objective is acquiring and managing holdings in other companies for profit, without direct or indirect involvement in the management of those companies other than exercising shareholder rights.

These rights may include voting at general shareholder meetings to oversee and protect their investments. This scope exclusion is limited to companies with diverse holdings, meaning the business models and operations of their underlying investments are independent of one another.

Therefore, this excludes closely interconnected subsidiaries. This exclusion does not remove any reporting obligations for subsidiaries that individually meet the CSRD scoping thresholds.

The group exemption. If a parent (EU or non-EU) prepares an ESRS-aligned sustainability report that covers the entire group and makes it publicly available, all in-scope subsidiaries are exempt from preparing their own individual sustainability reports.

The ultimate non-EU parent exemption. If a non-EU parent has multiple EU subsidiaries that meet the general scoping criteria, one of the largest EU subsidiaries may prepare a consolidated sustainability report (commonly referred to as ‘artificial consolidation’) on behalf of the group that includes only those subsidiaries that fall under the general scoping.

This report must follow the ESRS requirements applicable under the general scope. According to the EC’s CSRD FAQs, this exemption is available for financial years ending on or before 6 January 2030.

Scope of the holding company exemption

This exemption is intended for holding companies that are not directly or indirectly involved in managing their subsidiaries. While many holding companies may have extensive limited resources or employees, they are often designed to enable the ultimate parent to manage subsidiaries indirectly through them. Read more in the information note issued by the General Secretariat of the Council to the Member State delegations.

Timeline for companies affected

The CSRD's phased-in effective dates have been significantly revised by the Stop-the-clock Directive (postpones effective dates of application of the CSRD by two years for certain companies) and Content Directive (aims to reduce reporting burdens by primarily limiting the CSRD scope to the largest companies).

For clarity and consistency, the updated timeline below continues to reference the CSRD’s original implementation phases, referred to as ‘Waves’.

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Swiss alignment with International Standards

Following the temporary halt of revisions to Swiss sustainability reporting and corporate due diligence requirements pending further clarity on EU developments, the Swiss Federal Council published a new draft law, the Federal Act on Sustainable Corporate Governance (NUFG), on 1 April 2026.

The consultation ran until 9 July 2026. The proposal marks Switzerland’s intended move toward an EU-aligned update of its sustainability regulatory framework, while seeking to avoid Swiss gold plating and to protect SMEs from excessive information requests.

Swiss ESG regulation update 2026

For more detail, see KPMG Switzerland’s ESG regulation update:

Download PDF

Under the proposal, non-financial reporting obligations would apply to i) large Swiss groups with more than 1,000 FTEs and annual net turnover exceeding CHF 450 million worldwide over two consecutive years, and ii) foreign-controlled companies and Swiss branches of foreign-based groups, if – together with the controlled domestic and foreign entities – they generate more than CHF 450 million net turnover in Switzerland over two consecutive years.

The draft proposal provides for strong alignment with the CSRD/ESRS framework, while permitting reporting under ESRS or equivalent internationally recognized standards. Limited assurance would become mandatory for sustainability and due diligence reporting.

What Swiss companies should do to prepare for these ESG reporting regulations

Swiss companies should take a proactive approach to ESG reporting in light of the CSRD amendments and the broader shift toward global sustainability standards.

Even companies not yet in scope can benefit from early preparation to meet future requirements and rising stakeholder expectations.

Reporting level

Reassess scoping. Review the amended CSRD thresholds and determine if, how, and by when your company or subsidiaries fall within scope. Include checks for the financial holding company exclusion and non-EU parent requirements.

Evaluate the applicability of other regulations. Assess whether other ESG frameworks such as the ISSB standards, TCFD and emerging regulations in jurisdictions like the UK, China or California (SB-253) and other U.S. states apply to your business.

Assess your role in CSRD value chains. Even if your company is no longer directly in scope, you may be required to provide sustainability data to in-scope partners. Consider reporting under the Voluntary Sustainability Reporting Standard (VS) to streamline requests and maintain transparency.

Align with your sustainability narrative. Ensure that your reporting approach supports your broader ESG strategy and meets stakeholder expectations. Consistent messaging across sustainability initiatives strengthens credibility and trust.

Decide on reporting options. Determine the appropriate reporting level (group vs. subsidiary) and select the structure and standards that best fit your business context (e.g., ESRS, ISSB).

Engage leadership early. Secure buy-in from your management team to ensure that the right resources and governance structures are in place for effective sustainability reporting.

Structure

Plan for ESRS alignment. Companies should familiarize themselves with the final revised ESRS and assess what changes and adaptations may be needed compared with the initial ESRS and already existing reports.
Perform a gap analysis. Update your Double Materiality Assessment (DMA) approach in light of the revised ESRS and identify gaps in data, processes, and controls. Use this to build a roadmap.
Identify reliefs and phase-ins. Define early on which ESRS reliefs and phase-in provisions you intend to apply and align these decisions proactively with your auditor to ensure smooth implementation and compliance.

Quality

Close data gaps. Identify missing data points and establish robust data collection processes.
Strengthen systems and controls. Consider new technology solutions and leveraging AI for efficiency and accuracy.
Prepare for assurance. Build audit readiness into your reporting processes to meet upcoming limited assurance requirements.

Conclusion

Many Swiss groups will be affected by these new reporting regulations in the medium to long term. It is strongly recommended to analyze the group’s legal structure and upcoming requirements to identify which entities fall within the scope of the new regulations, and by when. Such an analysis should also take into account the forthcoming Swiss regulations. Based on these insights, companies can develop a targeted strategy and roadmap for efficiently and effectively with the evolving ESG reporting landscape.