Sustainability Reporting in Transition: What the EU Omnibus Package Means for Swiss SMEs

On February 24, 2026, the Council of the European Union formally adopted the so-called Omnibus I Package. With this step, the EU is making a noticeable course correction in sustainability reporting — with consequences that extend well beyond the EU’s borders. At its core, the package concerns the obligation of companies to report annually on their impacts and risks in the areas of environmental, social, and governance matters — commonly referred to as ESG reporting. For Swiss SMEs, concrete questions now arise: What already applies in Switzerland today? What had the Federal Council planned? And what is actually changing now?

From the NFRD to the CSRD: A Brief Retrospective

Sustainability reporting in Europe has a long trajectory. In 2014, the EU established the first binding minimum requirements with the Non-Financial Reporting Directive (NFRD), which, however, only covered large listed companies with 500 or more employees. In 2022, the significantly more ambitious Corporate Sustainability Reporting Directive (CSRD) followed as a core element of the European Green Deal: it was intended to progressively obligate companies with 250 or more employees to report — including third-country companies such as Swiss firms with EU subsidiaries or EU revenue. The CSRD also introduced the European Sustainability Reporting Standards (ESRS) along with the concept of double materiality: companies must report not only on sustainability risks to their business, but also on the direct and indirect impacts of their activities on the environment.

What Already Applies in Switzerland Today

Switzerland has its own regulatory framework, which has been influenced by EU developments. Since 2022, Art. 964a et seq. of the Code of Obligations (CO) have been in force: Swiss public companies (listed companies, banks, and insurance companies) with 500 or more employees must report annually on non-financial matters, including environmental, social, human rights, and anti-corruption issues. As of January 1, 2024, the Ordinance on Climate Reporting additionally applies, requiring large companies to disclose climate-related risks in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) framework.

For the vast majority of Swiss SMEs, the situation remains unchanged: no statutory reporting obligation.

What the Federal Council Had Planned

Since the CSRD directly affects Swiss groups with an EU presence, the Federal Council launched a consultation process in June 2024. The threshold was to be lowered to 250 full-time equivalent employees. According to the explanatory report, approximately 3,500 companies would have been newly subject to the reporting obligation — compared to roughly 200 today. An external audit requirement and expanded disclosure obligations were also planned.

The consultation period ended in October 2024. Even before the final EU decision, a shift in direction was already emerging in Brussels: in November 2024, the European Council called for a “Simplification Revolution” to reduce regulatory burdens through the Budapest Declaration. The Federal Council responded and, on June 25, 2025, suspended both the revision of the CO and the amendment of the TCFD Ordinance. It intends to decide on next steps no later than spring 2026.

What the Omnibus I Package Specifically Changes

With the Council’s decision of February 24, 2026, the EU legislative process has been concluded. The key changes are as follows:

Raised thresholds: The CSRD will apply only to companies with more than 1,000 employees and annual net turnover exceeding EUR 450 million. As a result, approximately 80–90 percent of the companies originally subject to the directive across Europe are now excluded. Listed SMEs are fully exempted.

Value chain protection (“Value Chain Cap”): Reporting-obligated large EU companies may no longer request information from suppliers with fewer than 1,000 employees that goes beyond the voluntary VSME Standard (Voluntary Sustainability Reporting Standard for SMEs). Suppliers are entitled to refuse requests for more extensive disclosures. This protection applies regardless of whether the supplier is domiciled in the EU or in Switzerland.

For Swiss third-country companies, the following conditions must now be met cumulatively: consolidated EU net turnover exceeding EUR 450 million at the parent company level, and an EU subsidiary or branch with turnover exceeding EUR 200 million. Such companies would first become subject to reporting requirements in 2029, for the financial year 2028.

What Does This Mean in Practice for Swiss SMEs?

The Omnibus I Package does not have direct legal effect in Switzerland, but it does have an indirect impact — on the one hand through regulatory alignment pressure vis-à-vis the EU, and on the other through a de facto reduction in data requests for suppliers from their EU customers.

For SMEs without a relevant EU presence, the situation remains unchanged for the time being. The existing CO obligations for public companies (Art. 964a et seq. CO) continue to apply, and any extension to a broader scope has been deferred for now — though the Federal Council will need to announce how long that deferral will last.

For SMEs acting as suppliers to large EU companies, the Omnibus Package brings tangible short-term relief through reduced data requests. Nevertheless, customers, banks, and investors frequently request sustainability information beyond what is legally required. Companies that want to respond to such requests efficiently should consider the VSME Standard. It provides a standardized, SME-friendly entry point into sustainability reporting and is expressly recommended by the European Commission.

For SMEs with an EU subsidiary or an EU stock exchange listing, a review is advisable. Those that fall within scope may have ongoing reporting preparations underway that are no longer strictly required — but that may nonetheless retain operational value.