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The EU is constantly introducing new (parts of) laws that impose an obligation on companies to report on environmental and social issues. The reporting must be based on reliable figures so that the statements of the companies in this area are comparable and reliable; not least to prevent a whitewashing of the company’s own activities and offers. In addition, there are specific national laws that also provide for reporting obligations, such as the Supply Chain Sourcing Obligations Act in Germany (see our detailed article here), and in Switzerland, which we will discuss in more detail in this report.

The reporting regularly covers the entire company, including non-EU companies, and – this is the challenge in terms of the data basis – includes the supply chain. This leads to a need for adaptation in contracts, because the specific reporting obligations cannot be fulfilled if a company lacks the figures. Now, however, in view of the specific legal requirements, it is no longer possible to impose general due diligence obligations on suppliers. Or to pass on a general Code of Conduct and then agree that everyone fulfils their own, because they are basically the same.

If a company is subject to specific legal requirements of ESG reporting obligations, it must comply with these in detail; of course, this then also applies to the suppliers. Basically, this approach is nothing new – we know it from data protection. With the GDPR, companies were faced with new requirements and suddenly had to contractually ensure that the supplier (processor) complies with very specific obligations – purpose limitation, time-critical limits for the notification of data protection violations, assurance by the controller that the data may also be processed, etc. – and that the supplier is obliged to comply with these obligations.

As far as ESG reporting obligations are concerned, it is the same, just with new terminology: The supplier must be obliged to comply with very specific legal requirements. We have formulated very concrete proposals at the end of this article on how this can be done. In the following, however, we will first give you an overview of the European situation regarding ESG, then outline the Swiss legal situation and give you an impression of how these obligations can be implemented contractually.

1. Introduction: EU – Background:

With the “Green Deal”, the EU agreed in 2019 to a reduction of CO2 emissions by 55% by 2030 and kilo-neutrality by 2050. This is to be helped by the reorientation of capital flows, which are to be channelled into sustainable growth and such economic activities. By ratifying the Paris Climate Agreement, Switzerland has also committed itself to a 50% reduction in greenhouse gases by 2030 compared to 1990. To this end, laws with new reporting obligations on the topic of ESG (Environmental, Social and Governance)are being enacted atthe EU level as well as nationally .

The aim is to standardise reporting, to create reliable and comparable figures and make them available, and thus to prevent “greenwashing”[1]greenwashing”, i.e. the pretence of environmental friendliness. While the focus is currently on the topic of climate and sustainability, all ESG factors are to be covered by the reporting obligations in the future.

To this end, companies from the financial sector as well as from industry are to comply with these obligations. The Sustainable Finance Disclosure Regulation (SFDR), for example, has imposed an obligation on EU financial institutions since January 2022 to provide information on the weighting of ESG factors with regard to their products, but also with regard to the company itself; starting with the company for the country and its people, including the supply chain. The Corporate Sustainability Reporting Directive (CSRD), in force since January 2023, is the counterpart for the “non-financial world” and imposes corresponding reporting obligations on large and listed companies as well as listed SMEs[2] corresponding reporting obligations.

The connecting element, or the “tool” for quality assurance with regard to the reported figures, is the EU taxonomy. It establishes the classification system against which companies are then supposed to assess their activities and their impact on climate / environmental targets.[3] By means of delegated acts, very specific criteria are established for the respective industries.[4]

At present, reporting still focuses on environmental aspects, i.e. the “E” in ESG. In the future, however, social and company-related aspects (“S” and “G” in ESG) will also be included. And at the moment, all these obligations tend to affect the larger companies, but in the medium term, smaller companies should also be covered.

Overall, the following trends can be observed in the area of ESG

  • The regulations are intended to achieve the goals of the EU Green Deal / Paris Climate Agreement.
  • “Forcing” the economy via finance (investors and providers of financial products) to be sustainable by:
  • Standardising reporting, making figures reliable, comparable and available
  • Both industrial and financial companies must comply with these reporting obligations.
  • At the moment, the focus is on climate / sustainability reporting; in the future, the goal is to cover all ESG factors
  • These obligations are currently applicable to “large” companies, but in the future smaller / SMEs should also be covered.
  • From an investment steering perspective, smaller companies are already affected when their larger donors have to report and these reports include the entire supply chain.

The fact that the entire supply chain is included in the reporting is also relevant insofar as the climate balance of a company regularly includes all emissions (Scope 1 to 3 – see our article), which is also what the standards for climate reporting under the SFDR require since January 2023, which must also include the Scope – 3 emissions of a company.

And for Switzerland, too, reporting on ESG issues has been mandatory since 1 January 2023, otherwise sanctions may be imposed:

2. Swiss ESG reporting obligations

As a counter-proposal to the Corporate Responsibility Initiative (KVI)[5] the Swiss Federal Council has issued the Ordinance on Reporting on Non-Financial Matters. It entered into force on January 1st 2023 and will be implemented by introducing Articles 964a – 964c in the Swiss Code of Obligations (OR).[6] Non-financial reporting covers the well-known “ESG topic areas” of environment / CO2 targets, social affairs, employee concerns, human rights and anti-corruption. The second area of reporting that must be carried out on the basis of the Ordinance specifically concerns commodity companies and imposes due diligence and reporting obligations on them in the areas of “conflict minerals” and “child labour”; as indicated above, the reporting obligations here also extend to the value chain.

In Switzerland, these new regulations are aimed at publicly traded companies and companies under FINMA supervision. The main criteria are that the companies, together with foreign companies controlled by them, have at least 500 employees in two consecutive financial years and have a balance sheet total of at least CHF 20 million or a turnover of at least CHF 40 million.[7]

Companies that fail to report in Switzerland or even publish false information in the reports on non-financial matters risk a fine of CHF 100,000 under Article 325ter of the Criminal Code. In the case of negligence, the fine is still CHF 50,000. However, the resulting damage to reputation and loss of confidence on the part of investors and consumers can be far more drastic.

Reporting on environmental issues is done by the “double materiality” method. This means that companies have to explain the impact of their activities on the environment and vice versa. Furthermore, the report also includes the companies of a company that are domiciled abroad.

The legal requirements for the content of the reports can be found in Art. 964 a of the Swiss Code of Obligations and are detailed: In the case of CO2 targets, the quantitative and financial parameters must be disclosed. The quantitative parameter requires the disclosure of all greenhouse gas emissions as well as the calculation basis to enable comparability. The financial parameters include the entire ESG strategy, concepts, measures, key figures as well as the targets and the risks that may arise in the implementation of the targets.

Another recognised approach to reporting can also be chosen; we have already explained the EU-specific options for this. But beware: If, however, another approach to reporting does not cover elements that would have to be included on the basis of Swiss law, it must be explained why it is being reported on (or not at all), based on the principle of “comply or explain”. This approach should guide investors and consumers and, if credibility is lacking, result in these companies being at a market disadvantage.

The report must be published electronically on the website and be accessible for at least 10 years. Even if this is done in the course of the annual report, it is recommended to prepare a separate report in view of the criminal law consequences.

And how can the whole thing now be implemented contractually in such a way that a company also has all the information it needs for reporting on the basis of the specific legal requirements? As in data protection – with specific contractual regulations, adapted to the relevant terminology:

  • Create concrete responsibilities and regulate reporting in detail
  • Commitment to the (applicable) legal reporting standard, based on EU / CH regulations (product disclosures by suppliers based on taxonomy calculations and standardised disclosures of the respective delegated acts).
  • in addition, include any industry-specific regulations such as Code of Conducts.
  • Contractual assurances from direct suppliers that all company targets (such as climate targets) will be met accordingly (note: if your company target is “net zero”, your suppliers must be as well).
  • In addition, check company statements on websites and in any marketing materials for climate targets and ESG standards that a company has set for itself and make sure that these are in line with legal requirements and company reality. These sources are also the responsibility and liability of the company.

We already have concrete clauses ready for your contracts and are happy to support you in the contractual implementation of your ESG obligations.

[1] EU definition: when products or processes appear more environmentally friendly than they actually are, via:

[2] Small and medium-sized enterprises


[4] The EU Taxonomy Climate Delegated Act of 21 April 2021, applicable since 1 January 2022 (“EU Taxonomy Delegated Act Climate”), establishes performance criteria to determine, for the energy sector covered therein, which economic activities make a significant contribution to the objectives of the Green Deal.

[5] The popular initiative “For responsible companies – to protect people and the environment “1 (KVI) demanded that the federal government enact legal requirements for the economy. Swiss companies should have been obliged to respect human rights and environmental protection in their activities, also abroad (

[6] Cf. media release of 18 August 2021 (Federal Council sets benchmarks for binding climate reporting for large Swiss companies ( The framework for reporting is set by the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) of the G20 countries. See Explanatory Report on the Opening of the Consultation Procedure on the Ordinance on Reporting on Climate Issues, p. 8.

[7] Explanatory Report on the Opening of the Consultation Procedure on the Ordinance on Reporting on Climate Change Issues, p. 4.