Sustainability Reporting & Due Diligence

Sustainability Reporting

Switzerland: In December 2021, the Swiss Federal Council enacted the legislative amendments to the indirect counterproposal to the Responsible Business Initiative (RBI-CP). As of the financial year 2023, large Swiss companies will have to disclose the risks within their business activities regarding environmental matters, in particular CO2 goals, social issues, employee-related issues, respect for human rights and the fight against corruption, as well as to report on the countermeasures taken.

In addition, minimum requirements for reporting on climate risks, based on the TCFD recommendations, will be introduced via the ordinance on climate reporting.

EU: Swiss reporting on non-financial matters is based on the Non-Financial Reporting Directive (NFRD) currently applicable in the EU on CSR reporting. In the EU, the NFRD will soon be replaced by the planned Corporate Social Responsibility Directive (CSRD), whereby both the group of companies affected and the scope of reporting will be significantly expanded. The EU is currently developing its own European Sustainability Reporting Standards, which must be applied uniformly in the future. In addition, disclosure with regard to the EU taxonomy must be included in the sustainability report, according to which companies must disclose for an audit of the sustainability report.

For Swiss companies that are active in the EU, it can be expected that by implementing EU requirements they will also meet the Swiss requirements at the same time. However, this also requires a group-wide consolidation of data and corresponding reporting processes. In comparison to Switzerland, the EU regulation also provides for an obligation to check reporting.

Applicability

Sustainability Due Diligence

Switzerland: With the legislative amendments of the Swiss Code of Obligations through the indirect counterproposal to the Responsible Business Initiative (RBI-CP) new due diligence and transparency obligations will apply, which have been further specified in the Ordinance on Due Diligence and Transparency Regarding Minerals and Metals from Conflict Areas and Child Labour (DDTrO). Swiss companies in scope of the regulation will from financial year 2023 onwards have to exercise due diligence across their supply chain on the sensitive topics of conflict minerals and child labour, including the implementation of a supply chain policy and traceability system.

EU: Earlier this year the European Commission published a proposal for a Corporate Sustainability Due Diligence Directive (CSDDD). Companies that fall within the directive's scope have to identify, prevent, mitigate, cease or minimize actual and potential adverse impacts on the environment and on human rights. Similarly, they have to check for their adverse impacts on protected persons resulting from the violation of rights enshrined in international conventions. These due diligence practices have to be integrated into the company’s policies, procedures and management.

From a market perspective in particular, implementation of the EU requirements is advisable for Swiss companies as well, since customers affected by the regulation will in future pass the requirements on to their suppliers.

Applicability