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Legal framework for non-financial reporting: what are the obligations for Swiss companies?

November 2022

Reporting, the practice of publicly reporting on corporate management, performance, and impacts, was historically focused on the financial performance of a company. For several years, reporting has been extended to the extra-financial characteristics of a company's activities.

Since the beginning of 2022, large Swiss companies are obliged to report on a certain number of extra-financial issues related to their activities. In November 2022, the Swiss Federal Council adopted a new Climate Disclosures ordinance for large companies, which will be brought into force on January 1st, 2024.

This kind of obligation is increasing and tends to apply to a growing number of companies.

What reporting requirements do Swiss companies have to meet? What is the current state of the regulations in place and what are the new ones to come?

5 questions to Bernard Vischer and Giulia Marchettini, Schellenberg Wittmer :

What are the drivers behind the increase in non-financial corporate reporting regulations?

This increase is the result of a combination of several factors, the main ones being: (i) the growing market demand for sustainable investments and (ii) the growing awareness in the financial community of the importance of Environmental, Social and Governance (ESG) criteria. The importance of ESG criteria goes beyond the purely ethical aspect and also encompasses considerations related to financial returns and corporate risk management.

To what extent are the new regulations in Switzerland indicative of a paradigm shift regarding the social and/or fiduciary responsibility of domestic companies?

From a legislative point of view, what is Switzerland's positioning on these issues? Is it rather a pioneer or a laggard compared to other jurisdictions?

How will the proposed regulations allow for a move towards reporting based on the concept of double materiality, or contextual materiality, i.e. reporting that focuses not only on the risks to the company's finances but also on the company's impacts on human and environmental resources?

Could these recent regulations represent a risk in terms of competitiveness for Swiss and/or European companies?


Swiss laws

Recent popular initiatives have called for greater transparency of companies' societal impact, including the Responsible Business initiative rejected in November 2020. Its counter-initiative has nevertheless led to the implementation of regulations, following the will to standardize the reporting of non-financial impacts of Swiss companies. Laws within the Swiss Code of Obligations and dedicated circulars incorporate these obligations, ranging from due diligence to reporting.

Foreign laws with an application for Swiss companies.

Other countries or unions have also introduced non-financial reporting requirements. Some of these include companies not only based in the relevant geographical area, but also those that merely operate in that area. As a result, companies based in Switzerland and operating in these areas will have to comply with these regulatory frameworks.

This is the case of EU directives, whose reporting framework include foreign companies, in order to apply the laws to any entity operating in the territory.


1) Expansion of regulations

As a result of the increasing demands for transparency from corporate stakeholders, ranging from customers to investors, new regulations on the subject of non-financial reporting have multiplied in Switzerland in recent years. The reporting obligation now in force for large companies tends to be extended to small and medium-sized companies.

Swiss companies must therefore expect a legislative scope that is increasingly extended in terms of the companies concerned, and increasingly restrictive in terms of the mandatory content to be shared publicly or the guidelines to be followed.

2) Standards to respect

Companies must therefore anticipate the new regulatory requirements, and consider following existing standards, such as reporting through the TCFD for climate issues, institutional standards, such as those of the European Union's CSRD, or recognized standards, such as those of the GRI.

3) Risks in case of non-compliance with regulations

Non-compliance can result in severe penalties. For example, up to CHF 100,000 in fines for non-publication or false declarations in the context of extra-financial reporting requirements for large Swiss companies.



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