Switzerland to adopt new ESG reporting rules

New ESG reporting obligations will come into force for Swiss compnaies, likely by 2022.

The new ESG reporting duties apply only to companies listed on an exchange or have bonds issued as well as banks, insurance companies and other supervised companies in the financial sector, which together with their subsidiaries in Switzerland and abroad have at least 500 full-time employees and exceed either total assets of CHF 20 million or revenues of CHF 40 million.

It is expected that starting as early as 2022, companies of public interest will be required to issue an annual report on the impact of their activity on environmental (including CO2 targets), social, employee, human rights and anti-corruption matters. It must be approved by the board of directors as well as by the general meeting of shareholders. The report has to include a description of the group’s ESG policies although it allows a reporting company to avoid reporting, provided the report includes a well-reasoned explanation for such lack of compliance.

The new law also imposes special due diligence and related reporting obligations to all Swiss companies (not only to companies of public interest) which import or process minerals or metals containing tin, tantalum, tungsten or gold from conflict or high-risk regions, or which offer products or services where there are reasonable grounds to suspect child labour.

The new rules come into effect despite Swiss voters rejecting the Responsible Business Initiative on 29 November 2020 for additional due diligence requirements on Swiss companies. The Responsible Business Initiative aimed to impose additional due diligence and indemnification obligations on Swiss companies for damage caused abroad by subsidiaries under their control when violating internationally recognised human rights and international environmental standards.