From Brussels to Bern: how Swiss companies can leverage the power of ESRS

Over the past years, sustainability and ESG criteria have transitioned from a peripheral concern to a core topic across society, politics, businesses, and investors. As a part of the global shift towards sustainable development and achieving net zero, the European Parliament and Council introduced the Corporate Sustainability Reporting Directive (CSRD). The details how companies have to disclose their non-financial information under this directive are specified in the European Sustainability Reporting Standards (ESRS), marking a significant stride in transparency and standardised sustainability reporting. In July 2023, the first set of these standards was released by the European Commission. What does this mean for Swiss companies?

CSRD and ESRS: sustainability through disclosure

The primary objective of both CSRD is to promote sustainable business practices with the aim to address market failure resulting from a lack of information among various players. The ESRS form the CSRD’s main instrument for achieving this objective through:

1. establishing transparency in business operations through comprehensive disclosures, and, at the same time,
2. creating an applicable standard to enable true comparability.

It’s interesting to note that these regulations don’t impose specific ESG obligations but compel companies to disclose comprehensive information instead. The ESRS embodies a distinctly neoliberal market approach, emphasising transparency rather than prescriptive targets or measures. By mandating companies to disclose specific information, it not only creates market pressure but also signals a clear belief: transparency drives sustainability. As informed markets favour more sustainable enterprises, companies that prioritise sustainable practices stand to gain, while those that lag are risking competitive disadvantage. Ultimately, this should encourage industry-wide sustainable progression.

The mere obligation of disclosure has stirred significant movement in the market. Beyond simply meeting the disclosure norms, businesses are actively analysing industry benchmarks, competitor stances, and viable opportunities to bolster their sustainability practices. Take CO2 emissions, for instance: While companies are required to disclose their emissions, there isn’t an imposed mandate on reducing them. Yet, many firms voluntarily establish and announce reduction targets. These self-imposed benchmarks not only foster an internal drive towards greener transitions but also heighten external competitive standards, compelling industry peers to increase their sustainability efforts.

Next steps for Swiss firms

For Swiss companies navigating the complexities of sustainability reporting, the immediate future is full of critical considerations. A five-step approach can guide you through the maze:

1. Initial assessment: The first step for Swiss firms is to undertake a comprehensive assessment of the applicability of non-financial reporting regulations and their current sustainability reporting practices. This includes a legal scoping against relevant sustainability regulations, identifying data sources, evaluating existing strategies and policies, and understanding the gaps in alignment with ESRS and other regulatory requirements.
2. Strategic prioritisation: It's crucial to prioritise key areas for improvement rather than trying to address all issues simultaneously. Through strategic prioritisation, organisations can efficiently allocate their IT, financial, and human resources to the tasks that will have the greatest impact.
3. Data verification: Ensure that the data underpinning your reports is robust and verifiable to withstand external scrutiny. Establishing a systematic process for data collection and verification is fundamental for accurate and reliable reporting.
4. Assurance: A trusted assurance provider is essential to ensure that your final sustainability reports comply with all regulatory and procedural requirements. Engage with a reputable assurance provider to perform the assurance engagement and subsequently release the public assurance report.
5. View the ESRS as a valuable guide: Instead of treating ESRS as a mere compliance obligation, use it as a valuable guide to improve your sustainability practices. ESRS prompts an in-depth review of governance, impact risks, and business fit, which can facilitate a shift towards a more sustainable business model.

How PwC can help

In the evolving landscape of ESRS and sustainability reporting, PwC stands as your strategic partner. Here is how we can support you: 

• Action plan development: PwC can help you develop a detailed action plan tailored to your organisation's unique needs and circumstances. Our collaborative approach ensures that we understand your specific requirements, sustainability reporting practice and gaps in your current disclosures to help you navigate the ESRS and sustainability reporting landscape effectively.
• ‘One report fits all’ strategy: Given the overlaps between ESRS and Swiss sustainability reporting, a streamlined ‘one report fits all’ approach could be beneficial. We aim to simplify the reporting process and minimise the burden, while ensuring compliance and meaningful insights.
• Continuous collaboration: Our commitment doesn’t end with the development of an action plan. We remain a strategic partner, offering ongoing support and guidance as you implement the ESRS, constantly align with the evolving sustainability standards, and help you stay ahead of the sustainability curve.
• Transformation vision: PwC not only guides you through compliance, but also helps you envision and realise a transformative sustainability journey. Our approach ensures that your path to sustainability is not just clear, but transformative.
• Trusted assurance partner: PwC is your trusted assurance partner to audit your sustainability indicators and subsequently issue an assurance opinion.

This approach, combined with PwC's expertise, aims to provide Swiss companies with a straightforward guide to improving their sustainability reporting and overall business sustainability.