Regulatory Round-up: Swiss Supply Chains and Directive Debates

September 11, 2025

By Caoimhe Taylor

The European Commission has continued to move forward with its ‘Omnibus’ proposals, as reported by Minerva Analytics, making comprehensive changes to both the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD).

The Omnibus seeks to simplify the requirements of the CSRD and CSDDD, raising the employee size and turnover thresholds companies have to meet in order to be required to comply with the Directives, reducing the number of datapoints and metrics involved in reporting, and postponing the reporting deadline by up to two years, amongst other changes.

However, these changes have not necessarily been widely accepted. Over 130 investors have signed a statement urging the Commission to withdraw these amendments, which they see as cutbacks to important ESG reporting requirements aimed at improving sustainability within corporate supply chains and operations. They note that simplification need not come at the cost of weakening the regulations in place, and that such changes may mean investors are not given the information they need to effectively evaluate companies and their capital allocations.

These regulatory changes come despite the European Parliament previously unveiling new laws aiming to tackle human rights abuses within corporate supply chains. This includes banning the import and export of products made with child or forced labour, as well as mandatory reporting of human rights and environmental risk assessments and mitigation plans. With the ILO reporting that the amount of profit made from illegal labour has increased by 37%, or U$64bn, since 2014, these laws will certainly have a huge impact on EU and European Economic Area (EEA) companies.

While this will undoubtedly have a knock-on effect for all EU and EEA-trading countries, one most under the spotlight currently is Switzerland. While Switzerland does already have a law requiring companies to identify and report potential risks of child labour and conflict area-sourced materials in their supply chain, this new initiative goes much further, with companies facing fines and sanctions if they do not take action to address the risks of human rights abuses.

Swiss companies have already come under the spotlight for incidents of child labour as well as other potential human rights issues in their supply chain; for example, chocolatier Lindt & Sprüngli was found by a public television channel to have been using children in its Ghanian cocoa plantations.

This is not the first amendment Swiss companies may have to consider in their reporting methods. Although a previous attempt to introduce a binding vote on due diligence requirements for companies in Switzerland, referred to as the Responsible Business Initiative, was rejected in 2020 -  despite receiving over 50% of the popular vote - a second initiative has been proposed and signed by over 280,000 citizens. They argue that other countries in the EEA have adopted comprehensive regulations regarding human rights and sustainability due diligence, leaving Switzerland, its consumers, and its investors, at a disadvantage. Their initiative aims to redress this imbalance, and is based on the CSDDD prior to the recent weakening of the requirements in this directive.

From this, the Swiss Federal Council has proposed to pause its revision of sustainability reporting requirements, in a counter-initiative based on the aforementioned Omnibus developments. While it is expected that Switzerland’s counterproposal to the Responsible Business Initiatives will not be officially released until March 2026, it is likely that the counter-initiative will adhere to the updates to the CSDDD and CSRD, and therefore may fall short of the expectations of the Responsible Business Initiative’s signatories.

While the European Parliament is taking comprehensive steps to increase ESG reporting, particularly in relation to human rights within corporate supply chains, the European Commission may be seen as ‘stripping back’ reporting initiatives on the topic of sustainability, which investors are generally still considering to be essential aspects of companies’ ESG programmes and risk management processes, and this movement towards decreasing reporting requirements may be demonstrated in Switzerland’s counterproposal. How these changes impact the operations of countries within the EU and EEA trading areas, such as Switzerland, and whether there will be any further investor pushback to these developments, will be interesting to see.

Minerva’s blog focuses on the latest developments in ESG investing and stewardship. Minerva is a global provider of sustainable stewardship solutions with over 25 years of expertise. Minerva empowers investors by providing essential tools, including ESG research and data, enabling them to navigate the intricate landscape of stewardship and proxy voting, whilst ensuring their decisions are well-informed and aligned with sustainable principles.

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