Although evolving regulation, diverse standards, and complexity are challenging, companies must act today by starting with simple, decision-useful reporting, even if the data is not yet fully available.  

Reporting Challenges  

Alongside general Climate Reporting challenges, this blog also looks at the implications of the Swiss ordinance on Climate Reporting.  

• Evolving regulation: Because regulatory bodies across the globe are racing to establish reporting standards while harmonising them, reporting companies are (currently) facing a rather dynamic set of requirements when it comes to reporting. That also means there are no universally accepted reporting standards (yet). As a result, companies may struggle to determine which sustainability and climate metrics to report, how to report them, and how to ensure the accuracy and reliability of the reported information.   

  
  

• Regional reporting differences: different countries, regions, or industries might have local reporting standards, which can lead to confusion and inconsistencies in reporting for organisations operating across multiple regions.  

  
  

• Swiss reporting standard choice: Swiss listed companies are in the unusually comfortable position that they may choose which reporting standard to comply with. They may choose between IFRS, US GAAP and Swiss GAAP FER for financial reporting. For Climate Reporting, per the Swiss ordinance on climate reporting, the optionality is less explicit if the reports are produced to comply with the TCFD framework and the Federal regulation. 

  
  

• Reporting in a machine-readable format: Given that Art. 4 of the ordinance requires both a human and machine-readable version of the report from January 2025, this means in practice that the choice available to companies at this point is limited to TCFD-compatible standards and frameworks that have committed to making an XBRL taxonomy of the standard concepts general. At this juncture (Autumn 2023) are the ISSB’s standards, IFRS S1 and S2, and the European Sustainability Reporting Standards (ESRS). Both standard setters have made their respective standards available in 2023 and taxonomies later.  

  
  

• Scope of double materiality: While the ISSB’s standards, with their single materiality approach, are geared towards investors, ESRSs encompass a double materiality standard with a significantly broader scope than ISSB’s standards. Given the ordinance’s requirement of TCFD compatibility with double materiality, the choice of the standard appears to have been whittled down to one on the face of it, namely ESRSs. This is particularly true for Swiss firms with EU-based subsidiaries, which will come under the CSRD mandate in compliance with ESRSs in 2029 anyway.  

  
  

• “The Reporting Telephone Game”: As reporting involves various disciplines and divisions, multiple parties are responsible for overseeing the final output, which can lead to a lack of transparency or inaccurate reporting due to differing agendas among the parties involved. 

Reporting Actions & Opportunities  

Reporting requirements and their implementation lay the foundation for successful Climate Reporting. Although there are many acronyms in the world of sustainability frameworks, regulatory bodies are working hard on harmonisation, starting with the question of what is material to a company's long-term success.  

Action - Make reporting decisions relevant:

Companies should shift from using Sustainability and Climate Reporting as a pure marketing tool to making it a valuable resource for decision-making.  Opportunity: Climate reporting has the potential for enhanced strategic planning and informed decision-making processes; by integrating Climate Reporting into decision-making frameworks, companies can gain valuable insights and data-driven perspectives that can guide their actions and strategies. 

Action - Follow established reporting frameworks and standards:

Companies should use internationally recognised and recommended reporting frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD), or the Global Reporting Initiative (GRI). Additionally, companies should ensure they stick to proven reporting approaches that are more likely to be accepted regionally and globally.  Opportunity: Following well-accepted approaches is necessary to ensure the quality and reliability of Climate Reporting and make it easier for stakeholders to understand and use the information presented. 

Action - Simplify reporting language and use correct terminology:

Companies should use standard reporting language associated with the respective standards and framework and limit technical jargon to ensure a wider audience easily understands the reports.  Opportunity: Simplifying the language used in Climate Reporting can make it easier for stakeholders to understand the presented information, increasing the likelihood that they will engage with it. 

Action - Join associations & expert networks:

Companies should stay updated on changing regulations and requirements. A cost-efficient way could be to join relevant corporate associations and networks. Examples include the Center for Corporate Reporting, Swiss Sustainable Finance, XBRL Switzerland or similar. Opportunity: Joining associations and expert networks can provide companies with access to knowledge and expertise on sustainability topics and opportunities to collaborate and share best practices with peers. The decision can help companies stay current on emerging sustainability trends and issues and identify opportunities to improve performance. 

Action - Choose TCFD Reporting:

Swiss companies can adopt multiple reporting standards to comply with local and international requirements, but the one that is clearly asked for is TCFD. Opportunity: By implementing TCFD reporting per the ordinance on mandatory climate disclosures, the company is choosing a cost-effective approach and is focusing on what is necessary.  

Action - Develop XBRL competencies:

Companies should invest in a basic understanding of what it means to report in XBRL, as this will be fundamental moving forward.  Opportunity: Since this will be a must in the future, a company has little choice but to work in a digital format; however, it can streamline their Climate Reporting process and improve the accuracy and comparability of their sustainability data and, in the future, be the basis for more accurate benchmarking of competitors.

Action - Assess double materiality:

Companies need to start incorporating a double materiality analysis into their Climate Reporting by considering both the impact of their operations on sustainability issues and the impact of sustainability issues on their business.  Opportunity: Not only is this the starting point for a holistic sustainability strategy for corporations, but the approach can also assist companies in identifying and prioritising sustainability issues that are most significant to their business and stakeholders.