Legal | Tax | Compliance
Legal | Tax | Compliance
ESG regulation continues to evolve across the EU, Switzerland, and the US, influenced by political dynamics, economic strategies, and societal expectations.
The evolution of Environmental, Social, and Governance (ESG) regulation is at a critical juncture, with significant developments occurring across major jurisdictions.
The European Union (EU) has initiated an Omnibus procedure to simplify its ESG regulation (mainly reporting obligations).
Switzerland has recently put a hold on its efforts to follow the EU reporting regulation until the outcome of the Omnibus procedure are clarified.
The United States sees increasing pushback under recent the Trump administration, focusing on prohibiting climate targets and Diversity, Equity and Inclusion (DEI) programs.
Meanwhile, Asia - especially China and Singapore - is embracing ESG more robustly.
In this complex landscape, Swiss companies with global operations must navigate a fragmented regulatory environment while remaining committed to sustainability goals
In an effort to enhance competitiveness, the European Commission introduced the Omnibus Simplification Package in February 2025. This proposal aims to reduce sustainability reporting obligations under directives like the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Notably, it seeks to decrease the number of companies required to report on sustainability by 80% and limit mandatory due diligence to Tier 1 suppliers. While some industry stakeholders view this as a necessary reduction of bureaucracy, others express concern that it may undermine progress in sustainable supply chains and diminish meaningful stakeholder engagement.
Switzerland has been proactive in aligning its ESG regulations with international standards. In 2024, large public interest companies published their first non-financial reports under the Swiss Code of Obligations. The Swiss Federal Council has proposed revisions to expand the scope and content of non-financial reporting, aiming for harmonization with the EU's CSRD. These proposed changes include more comprehensive reporting requirements and mandatory auditor reviews. However, the Federal Council recently announced to postpone the alignment with EU regulations until the EU has decided how to simplify the respective directives.
In addition to reporting enhancements, Switzerland is intensifying its climate commitments. The Climate and Innovation Act (CIA) and the revised CO2 Act enshrine the goal of achieving net-zero emissions by 2050. Companies are encouraged to develop roadmaps to reach this target, with the federal government providing support in the form of standards and technical advice.
The ESG regulatory environment in the US has experienced significant shifts following the 2024 presidential election. Unlike Europe, the United States has witnessed a backlash against ESG policies, particularly from the Trump administration and “red states” attorney generals. The Trump administration issued executive orders restricting ESG investment considerations in pension funds, arguing that fiduciary duty should focus solely on financial returns. Republican-led states continue to pass anti-ESG legislation, creating a fragmented regulatory landscape. Investment companies now face a complex environment where some states penalize ESG-driven investment strategies while others incentivize them.
Furthermore, Diversity, Equity and Inclusion programs are being challenged by the US administration. Companies have already withdrawn their DEI programs in order to either fly under the radar of the US government or not to lose lucrative contracts with the US government.
For Swiss businesses operating in the U.S., understanding the political pressure as well as state-level regulatory divergences are crucial. Strategies such as adopting a principles-based approach—complying with global ESG norms while remaining flexible in regions with resistance—can help navigate these challenges.
Despite the push back in the US and the simplification efforts in the EU, China has significantly expanded its ESG regulations, particularly in sustainable finance and corporate disclosure for listed companies. The country’s Green Bond Principles and national carbon market indicate strong state-driven support for environmental policies. However, businesses must account for the complexities of China's regulatory landscape.
Singapore is emerging as a regional ESG leader, with the Monetary Authority of Singapore (MAS) implementing mandatory climate-related financial disclosures and sustainability-linked lending frameworks.
Swiss companies operating in Asia should closely monitor Singapore’s evolving ESG landscape, as it often serves as a bellwether for broader regional adoption.
ESG regulation continues to evolve across the EU, Switzerland, and the US, influenced by political dynamics, economic strategies, and societal expectations. While the EU focuses on streamlining regulations to enhance competitiveness, Switzerland postponed the revision of its ESG reporting regulation. In contrast, the US navigates a shifting landscape marked by political ideologies and divergent state-level approaches. Businesses operating in these regions must remain agile, adapting to the complex and evolving regulatory frameworks to ensure compliance and capitalize on emerging opportunities in sustainable development.
Despite political uncertainty and regulatory fragmentation, ESG remains a material risk and opportunity.
Swiss companies may consider the following:
In an era of growing uncertainty, Swiss companies that proactively engage with ESG regulation will not only mitigate risks but also gain competitive advantages in an increasingly sustainability-conscious global market.
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