Mandatory sustainability disclosures are becoming the global norm. At this juncture, there are two major frameworks most jurisdictions model their legislation after: the ISSB’s IFRS standards and the EU’s Corporate Sustainability Due Diligence Directive (CSRD) and its ESRS standards. While the ISSB’s standards and their emphasis on financial materiality appear to be the global favorite, Switzerland has thrown its weight behind the EU’s CSRD. Switzerland, which is not a member of the European Union, is consulting on amendments to its Code of Obligations which will bring Swiss national law in line with the CSRD. Responsible Investor reports on the government’s decision to conform to the CSRD stating:
“The new rules would require around 3,500 companies to report on their environmental, human rights and corruption risks, as well as the measures taken to prevent them. In line with the CSRD, companies which meet two of the three criteria – 250 employees, SFr25 million ($28 million; €26 million) in total assets, and SFr50 million in sales – for two consecutive years would be required to report.”
It is compelling that Switzerland is choosing to adopt the CSRD, rather than the ISSB standards considering that the reporting burden under the CSRD is remarkably higher. However, given Switzerland’s proximity to other EU countries and its desire to remain competitive in EU markets, the decision to go with CSRD makes sense. This is contrasted by the UK’s decision to base their reporting standards around the ISSB, despite formerly being a member of the EU. Just how much the EU economy will impact non-EU policy remains to be seen, but it is clear that CSRD disclosures are going to be important for companies and countries with strong ties to EU markets.
Our members can learn more about international disclosure standards here.
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