Takeaways

• Switzerland has proposed a new law that updates sustainability reporting and due diligence obligations for large companies.
• The proposed framework aligns closely with the EU’s CSRD and CSDDD regulations, ensuring consistency with European standards.
• Only the largest companies will fall under the new rules, reducing the number of firms required to report compared to current regulations.

Switzerland has introduced a draft law aimed at strengthening sustainability reporting and corporate accountability. The proposed Federal Act on Sustainable Corporate Governance will require large companies to provide more structured disclosures on environmental, social, and governance (ESG) issues and conduct stronger due diligence across their operations and supply chains.

The proposal aims to bring Swiss regulations closer to European Union requirements, particularly the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). These EU rules have recently been revised through the “Omnibus I” process, which reduced the number of companies required to comply by raising thresholds for reporting and due diligence obligations.

Read More: What is a Due Diligence in ESG?

Under the proposed Swiss law, sustainability reporting requirements would apply only to companies with at least 1,000 employees and annual revenue of CHF 450 million (approximately €488 million). This change means that around 100 companies would fall within the scope of the law, compared to about 200 companies currently subject to sustainability reporting requirements.

Companies covered by the new regulation will be required to prepare reports based on internationally recognized standards, such as the European Sustainability Reporting Standards (ESRS) or equivalent frameworks. These standards ensure consistent disclosure of key sustainability information, allowing investors and stakeholders to compare company performance more easily.

Switzerland already has sustainability-related rules in place. At present, companies with more than 500 employees must publish annual reports covering environmental, social, governance, human rights, and anti-corruption matters. Additionally, the country’s climate disclosure regulation requires companies to report on greenhouse gas emissions, climate risks, and transition plans aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

The proposed law also introduces stricter due diligence requirements for the largest corporations. Companies with at least 5,000 employees and annual revenue of CHF 1.5 billion (€1.6 billion) will be required to assess potential negative impacts related to human rights and environmental standards across their operations and supply chains.

Organizations will need to establish clear policies and risk management systems to identify, prevent, and address potential issues. This includes developing codes of conduct, creating prevention plans, implementing complaint mechanisms, and monitoring the effectiveness of their actions. According to the Swiss Federal Council, approximately 30 companies will fall under these new due diligence requirements.

Currently, Swiss due diligence obligations apply mainly to companies involved in sectors with risks related to child labour and conflict minerals. The proposed law significantly expands the scope by covering a wider range of human rights and environmental concerns.

Also Read: Most EU Firms Follow ESG Reporting Rule; 65% Use it Strategically

Overall, the proposal reflects Switzerland’s effort to remain aligned with European regulatory developments while balancing reporting obligations with business competitiveness. By focusing on large companies, the government aims to ensure meaningful disclosures without placing excessive burden on smaller firms.

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Source: ESGtoday