Using the CSRD to enhance risk insights for the Swiss financial market place

What sustainability risks is the portfolio exposed to? That is the question CROs of financial institutions are – or should be – trying to answer. Together with other sustainability reporting requirements (e.g. RBI), the Corporate Sustainability Reporting Directive (CSRD) will require them to be transparent about their answer. But, due to the vast scope of and uncertainties surrounding climate change and biodiversity loss, providing this information is a complex task. Navigating the regulatory landscape becomes more challenging when we consider Swiss companies, as they operate within the framework delineated by art. 964a–c of the Swiss Code of Obligations (CO), the Swiss counterproposal to the Responsible Business Initiative (RBI), the EU CSRD and the Task Force on Climate-Related Financial Disclosures (TCFD).​

Fortunately, the CSRD offers assistance in this regard. It compels businesses to be transparent about their environmental, social and governance practices, aiming to foster more sustainable business conduct and resetting the value-creation agenda for the coming decades.​

Financial institutions, meaning both banks and insurance firms, must adapt to this transition. To comply with the CSRD and other sustainability-related regulations, institutions must perform a thorough double materiality assessment, enhance their understanding of sustainability risks and adopt effective mitigation strategies. Recognising the connection between the CSRD and risk management provides a major opportunity for efficient action. In the following, we outline two major actions that the Risk function should take with regard to the CSRD.​

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