• Cyrill Kaufmann, Director |

Overview of the CSRD

The CSRD would amend and significantly expand the existing EU requirements for sustainability reporting – both in terms of the number of companies in scope as well as the nature of the sustainability reporting itself. It is estimated that the scope would expand from less than 12,000 companies currently reporting under the Non-Financial Reporting Directive (NFRD) to nearly 50,000 companies under the CSRD - just in the EU. 

One of the provisions in the CSRD would introduce the requirement for companies in scope to report sustainability information based on European Sustainability Reporting Standards (ESRSs). Further, it would require the European Commission to adopt an initial set of ESRSs (drafted by the European Financial Reporting Advisory Group, EFRAG) by 30 June 2023 and additional standards in subsequent years. The ESRS are already available in an interim draft and are currently being revised.

There would be a separate standard for reporting by an ultimate non-EU parent company that is in scope of the CSRD in the future - an exposure draft on this is expected in the first half of 2023. 

In June 2022, the European legislative bodies reached a provisional agreement on the CSRD, which brings it one step closer to finalization. Although the CSRD is an EU Directive, it has considerable ESG reporting implications for non-EU based companies and companies with headquarters in Switzerland. 

Applicability for Swiss companies

The provisional CSRD includes different scoping criteria for EU versus non-EU-based companies – referred to in the following as the ‘general’ scope vs. the ‘non-EU parent’ scope. Whereas general scope would depend on listing status or size, non-EU scope would be based on a combination of physical presence in the EU and net turnover (revenue) generated in the EU. This interplay of requirements, plus related reporting exemptions, can make the scoping analysis complex. 

General scope: 
The CSRD would apply to all companies operating in the EU and their subsidiaries (EU-based companies) that meet the following general scope criteria: 

  • Large companies or large groups (i.e. a company including all its subsidiaries on a consolidated level) that meet at least two of the following criteria: 
    • 250 employees
    • €40 million net turnover (revenue) 
    • €20 million total assets 
  • Companies with listed securities in the EU other than ‘micro-companies’. A micro-company meets at least two of the following criteria: < 10 employees; ≤ €2 million net turnover; ≤ €2 million total assets. 

The general scope would include large subsidiaries of non-EU parents – i.e. all EU companies would be subject to testing under the above criteria regardless of the origins or domicile of their ownership.

Non-EU parent scope

Irrespective of the general scope described above, an ultimate non-EU parent company would be subject to the CSRD if it has: 

  • substantial activity in the EU – i.e. it generated net turnover greater than €150 million in the EU for each of the last two consecutive years; and 
  • at least: (a) one subsidiary that meets the general scope of the CSRD; or (b) one branch (in general, a physical presence) that generated net turnover greater than €40 million in the preceding year.

For an ultimate non-EU parent company that is subject to the CSRD, reporting would cover the entire group, i.e. from the perspective of the parent. However, there would be a separate disclosure standard. The disclosure requirements under the non-EU parent scope are expected to be slightly reduced compared to those under the general scope, for which the first set of exposure drafts has been issued. Further, any subsidiary that meets the criteria for the general scope would nonetheless be in the scope of the related disclosures that apply to EU-based companies.

Reporting exemptions

There would be three exemptions available under the CSRD. 

  • The group exemption. If a parent makes a CSRD-compliant sustainability report available that includes the entire group, all in-scope subsidiaries would be exempt from preparing their own sustainability reports. However, this exemption would not apply to subsidiaries under the general scope that are “large public interest entities” in the EU. Therefore, these subsidiaries would still be required to prepare a stand-alone CSRD-compliant report.
  • The ultimate non-EU parent exemption. If a non-EU parent has multiple subsidiaries in the EU that meet the criteria for the general scope, for the first seven years (until 2029) one of the largest EU subsidiaries would be allowed to prepare a consolidated sustainability report that includes those subsidiaries that fall within the general scope. This report would need to follow the reporting requirements specific to the general scope. 
  • The equivalency exemption. The European Commission has the power to designate individual sustainability reporting frameworks or reporting regimes as ‘equivalent’ to reporting under the CSRD. Note: no such “equivalent” reporting standards have been defined yet. 

Timeline for companies affected

Under the CSRD proposal, companies that are currently obliged to report under the Non-Financial Reporting Directive (NFRD) – i.e. listed EU companies with more than 500 employees – would be required to report under ESRSs for reporting periods beginning on or after 1 January 2024 (i.e. in reports issued in 2025). 

Other large EU companies that fall within the general scope would need to report under the CSRD from 1 January 2025. 

Small and non-complex institutions, captive insurers and certain listed small and medium-sized enterprises (SMEs) would be due to implement the CSRD by 1 January 2026. The latter would have an option to opt out until 1 January 2028. 

Ultimate non-EU parent companies with a combined group turnover in the EU of more than EUR 150 million would fall under the CSRD from 1 January 2028.



Many Swiss groups will be impacted by these new reporting regulations in the mid- to long term. An analysis of the group’s legal structure and upcoming requirements to identify which entities fall within the scope of the new regulations, and by when, is highly recommended. Such an analysis should also consider the upcoming Swiss regulations. Based on this, a strategy and roadmap can be developed on how to best adhere to these upcoming regulations.

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