Key Take-aways
1.
Since 1 January 2022, with the entry into force of Art. 964a et seq. CO, Swiss companies are subject to specific sustainability reporting and due diligence obligations.
2.
In the meantime, the EU established stricter standards through the CSRD and CSDDD, which Switzerland aimed to align with through revision proposals and legislative initiatives.
3.
However, the EU's new shift toward deregulation, reflected in the "omnibus" package proposal of early 2025, has meanwhile paused Switzerland's revision efforts.
1 Introduction
Swiss companies must comply with various reporting and due diligence obligations relating to environmental, social and governance (ESG) matters, based on Art. 964a et seq. CO. As was the case with the introduction of these regulations, their future development heavily depends on what happens abroad, particularly in the EU. At the beginning of the year, a comprehensive scaling back of existing sustainability regulations was proposed in the EU – driven in part by the deregulatory trend set in motion in the United States following the inauguration of President Donald Trump. This newsletter provides an overview of the current ESG reporting and due diligence obligations for Swiss companies as well as an outlook on possible further developments.
2 Applicable Reporting and Due Diligence Obligations in Switzerland
2.1 Legal Basis
The failure of the Responsible Business Initiative at the beginning of 2020 cleared the path for the indirect counter-proposal, which entered into force on 1 January 2022. The newly introduced provisions in Art. 964a et seq. CO establish transparency and responsibility of companies in the area of sustainability and cover three areas in particular:
1. Transparency on non-financial matters (
Art. 964a - c CO): Reporting obligations concerning corporate activities in the areas of the environment, social issues, human rights, and anti-corruption; further specified by the ordinance on mandatory climate reporting for large companies;
2. Transparency for raw material companies
(Art. 964d - i CO): Reporting obligations regarding payments made to government agencies in connection with the extraction of minerals, crude oil, natural gas, or timber from primary forests;
3. Due diligence obligations and transparency with regard to conflict minerals and child labour
(Art. 964j - l CO): Reporting obligations in relation to the fulfilment of due diligence obligations in the supply chain – detailed in the Ordinance on Due Diligence and Transparency in relation to Minerals and Metals from Conflict-Affected Areas and Child Labour (DDTrO).
The new Art. 964a et seq. CO regulate the transparency and responsibility of companies in the area of sustainability
2.2 Scope of Application
The legal requirements for reporting on non-financial matters apply to companies of public interest (i.e. listed companies, banks, insurance companies, and collective investment schemes) that, on a consolidated basis, employ an average of at least 500 full-time employees over two consecutive financial years and also exceed either a balance sheet total of CHF 20 million or an annual revenue of CHF 40 million.
Raw material companies are defined as those subject to ordinary audit and active in the extraction of minerals, crude oil, natural gas, or logging in primary forests. They are required to disclose payments of at least CHF 100,000 per year made to government agencies in connection with these activities.
Finally, in general, all companies based in Switzerland that import so-called conflict minerals (i.e. tin, tantalum, tungsten or gold) from high-risk areas into Switzerland or process them here or offer products or services where there is a reasonable suspicion of child labour must comply with the due diligence and reporting obligations regarding conflict minerals and child labour. However, the DDTrO provides for various exemptions in this regard. In particular, SMEs are exempt from the above-mentioned obligations relating to child labour (though not from those concerning conflict minerals) – except in cases where child labour is clearly evident.
2.3 Consequences of False Reporting Board members of companies who make false statements in the aforementioned reports (1)-(3), or who fail to report are subject to fines of up to CHF 100,000 for intentional conduct, and up to CHF 50,000 for negligent conduct (Art. 325ter SCC).
Fines of up to CHF 100,000 may be imposed for breaches in reporting obligations.
Independently of the reporting obligations under Art. 964a et seq. CO, an explicit ban on "greenwashing" applies to all companies since 1 January 2025. Under the new provision in Art. 3 para. 1 lit. x UCA, anyone who makes claims about themselves, their products, works, or services the climate impact of, without objective and verifiable substantiation, is deemed to be acting unfairly. This includes both qualitative claims (such as "sustainable," "climate-neutral," "green," or "CO2-neutral") and quantitative statements (such as CO2-consumption, greenhouse gas emissions, or offsetting), as well as procedural information (such as a description of the measures taken to reduce the impact on the climate). Violations of the UCA may result in both civil and criminal consequences.
3 Developments Abroad
3.1 EU
In recent years, the EU has developed a comprehensive package of ESG measures. As part of its commitment to the goals of the 2015 Paris Climate Agreement, the EU adopted the "Green Deal" in 2019, which aims to achieve climate neutrality by 2050. Two central pillars of this initiative is the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
Switzerland is not unaffected by this legislative push. It not only shapes the political discourse, but may also have direct implications for Swiss companies: Under the CSRD, third-country companies with an EU subsidiary or branch of a certain size and net sales exceeding EUR 150 million within the EU are also subject to EU reporting obligations. Further, the due diligence obligations under the CSDDD will also apply to third-country companies with an EU turnover exceeding EUR 450 million
However, at the end of February 2025, the European Commission proposed a sweeping "omnibus" reform package aimed at easing the regulatory burden. This proposal includes simplifications related to the aforementioned instruments, thereby relaxing certain sustainability requirements. The objective is to streamline the partially complex obligations, enhance practical applicability, and reduce administrative and economic burdens for companies.
The comprehensive "omnibus" reform package introduces a relaxation of sustainability requirements at the EU level.
The most important proposed changes to the CSRD include raising the employee threshold to at least 1,000 full-time employees at the group level worldwide; a move expected to reduce the number of companies affected by up to 80%. Additionally, the implementation timeline for certain companies is to be postponed (stop the clock), and the minimum net turnover threshold for third-country companies is to be increased to EUR 450 million. Data will no longer have to be collected from all suppliers across the entire value chain, but only from certain suppliers (value chain cap)
With respect to the CSDDD, the implementation deadlines are also to be extended, and the scope of the value chain will be limited to direct business partners only. Additionally, it was proposed that the applicability threshold be raised to 5,000 employees and EUR 1.5 billion in net turnover. Moreover, civil liability for companies and responsible individuals will no longer be mandatory, but left to the discretion of national legislators.
3.2 USA
The recent developments in the EU are likely influenced, at least in part, by political shifts in the United States. Under the Trump administration, the U.S. withdrew from the Paris Climate Agreement for a second time, reoriented its climate policy, and revised its ESG regulations. This strategic realignment is evident both domestically and internationally. One example is the reform of the United States Agency for International Development (USAID), responsible for administrating development aid.
Under the Trump administration, the USA has withdrawn from the Paris Climate Agreement for the second time and has realign its climate policy and ESG rules.
Many of its programmes have been restricted, cancelled, or realigned. There has also been a broader move away from social advancement initiatives – particularly in the areas of diversity, equity, and inclusion (DEI). In March 2025, the "Protect USA Act of 2025" was introduced as a bill aimed at prohibiting U.S. entities integral to the national interests of the United States from implementing foreign sustainability obligations – such as the EU's CSDDD.
4 The Future of ESG Regulation in Switzerland?
With the current reporting and due diligence obligations under Art. 964a et seq. CO, Switzerland has opted for internationally harmonised legislation. This alignment – particularly with the European ESG regulatory framework – should be maintained in the future.
In summer 2024, the Federal Council opened a consultation on its proposal to align the current Art. 964a et seq. CO with the stricter reporting obligations under the CSRD. The proposal specifically concerns the introduction of new Art. 964a - cter E-CO (transparency on sustainability aspects), which replace the existing non-financial reporting obligations (1). These new provisions are more detailed and stricter, and are intended to apply not only to companies of public interest, as before, but more broadly to large companies that exceed two of the following thresholds in two consecutive financial years: (i) balance sheet total of at least CHF 25 million; (ii) sales revenue of at least CHF 50 million; (iii) annual average of at least 250 full-time employees. This would expand the scope of non-financial reporting obligations from an estimated 250 companies today to approximately 3,500.
With regard to the CSDDD, the Federal Council commissioned a study back in 2023 to analyse its impact on Swiss companies.
The proposed EU "omnibus" package, which relaxes the requirements of the CSRD and CSDDD, will fundamentally alter the regulatory landscape. The previous basis for a potential tightening of Swiss ESG regulation is now outdated or, at the very least, subject to reconsideration. Accordingly, on 21 March 2025, the Federal Council took note of the consultation results on the proposed revision of Art. 964a et seq. CO and the updated study on the impact of the CSDDD. At the same time, it commissioned the development of new alternatives for a pragmatic amendment to the current legislation. The Federal Council does not intend to make a final decision on how to proceed until the EU has reached a decision on its planned simplifications – though no later than spring 2026. At present, it appears unrealistic for Switzerland to move forward with stricter regulations than those adopted at the EU-level.
5 Conclusion
There are differing views on whether the ESG regulation to date has produced more rhetoric than tangible value. However, the EU's withdrawal from its originally ambitious targets clearly illustrates that the implementation of sustainability requirements is often more complex in practice than it appears on paper – and that legislators face considerable challenges in formulating pragmatic and workable legislation. Amid shifting geopolitical dynamics, the momentum behind comprehensive sustainability regulation of companies and achieving sustainability goals has also weakened in Switzerland: The legislator has, for now, suspended its plans for stricter legislative revision and is awaiting clearer signals from the EU.
In this climate of uncertainty, Swiss companies are advised to monitor international developments closely and to ensure they are fully informed about the sustainability regulations currently applicable to them. Only by doing so can they collect the data required for reporting in a complete and timely manner, avoid breaches of due diligence obligations, and develop strategies to leverage ESG compliance as a driver of long-term corporate value.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
