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EU-compliant ESG regulation in Switzerland: due diligence, transparency and legal challenges

Competition law Corporate Law | M&A

Climate protection, human rights and corporate due diligence are becoming increasingly important – including in Swiss legislation. The Federal Council has taken a stance on sustainable corporate governance and is seeking to further develop national regulations in line with developments in the EU. But what does this mean in concrete terms for Swiss companies?

Legal background and political context

Since 1 January 2022, large Swiss companies have been subject to comprehensive reporting and due diligence requirements in the area of sustainability. These extend beyond environmental and social aspects and also relate in particular to human rights, working conditions, anti-corruption measures and, specifically, child labour and conflict minerals.

The regulations are based on the revision of the Swiss Code of Obligations (Art. 964a ff. CO) and are aligned with international standards such as the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights. Companies are required to report if they meet certain thresholds (including an average of 500 full-time positions and total assets of at least CHF 20 million or sales of at least CHF 40 million).

 

New momentum from EU legislation

At the European level, the EU Commission is pushing ahead with several legislative initiatives as part of the Green Deal. The Corporate Sustainability Due Diligence Directive (CSDDD) came into force on 25 July 2024 and aims to establish binding due diligence obligations along global supply chains. In addition, the Corporate Sustainability Reporting Directive (CSRD) significantly expands the scope and depth of sustainability reporting. To ease the burden on companies, an initiative has been launched to simplify and standardise existing ESG reporting requirements (first Omnibus Simplification Package). Details of this initiative can be found in our article ESG Update 2025: The First Omnibus Simplification Package – Relief and Challenges.

The Federal Council aims to avoid competitive disadvantages for Swiss companies and to keep their compliance structures compatible with EU requirements. To this end, the existing provisions in the Swiss Code of Obligations are being reviewed and, where necessary, amended. The focus is on transparency requirements and due diligence requirements in supply chains.

 

Results of the consultation and economic implications

On 26 June 2024, the Federal Council launched a consultation on extending transparency requirements. The responses were mixed: while non-governmental and consumer protection organisations called for more extensive obligations, business associations warned against additional bureaucracy. There was broad support for administrative simplification, indicating that the feasibility of the provisions should be carefully examined.

A study commissioned by the Federal Council and conducted by BSS Volkswirtschaftliche Beratung AG emphasises that unilateral tightening without international coordination could damage Switzerland’s attractiveness as a business location. Coordinated further development with the EU should therefore ensure legal and planning certainty as well as competitive neutrality.

 

Impact on business practice

Swiss companies should prepare early for potentially stricter and more uniform requirements. It is already advisable for compliance officers, legal counsel and CSR officers to:

  • review existing ESG strategies with a view to future regulation,
  • establish structured risk analyses in the supply chain,
  • professionalise internal sustainability documentation and communication.

The integration of ESG (environmental, social and governance) criteria into risk management and corporate strategy is becoming increasingly important for businesses, not only for ethical reasons but also for regulatory reasons.

 

New regulations for environmentally friendly advertising by companies

Companies that advertise using environmentally friendly claims should ensure that these can be substantiated by objective and verifiable evidence. They will be less susceptible to associated sanctions thanks to the newly introduced provision of the UWG, more specifically Art. 3 para. 1 lit. x UWG. According to the newly introduced provision, anyone who makes statements about themselves, their goods, works or services in relation to the climate impact they cause that cannot be substantiated by objective and verifiable evidence is acting unfairly.

The implementation of ESG criteria already requires extensive reporting and enables companies to present their sustainability performance transparently. Established sustainability reporting can help counter greenwashing allegations and increase the credibility of environmental advertising.

This once again demonstrates that Switzerland does not downplay environmental and sustainability concerns in a business context and is committed to greater transparency. You can find out more about the new UWG article in the article Greenwashing and climate claims: New rules will apply in Switzerland from 2025.

 

Recommended actions

  • Early evaluation of internal reporting processes and alignment with EU standards (CSRD, CSDDD) as well as adaptation to emerging legal changes
  • Adapt internal guidelines, take new legal requirements into account and integrate ESG criteria into the corporate strategy
  • Establish governance structures that embed ESG responsibility at management level; digital tools for recording and evaluating sustainability indicators should also be implemented

 

Conclusion and outlook

Sustainable corporate governance is more than just an ethical orientation today – it is legally enshrined, internationally embedded and increasingly economically relevant. With its current initiative, the Federal Council is pursuing the goal of creating coherent regulation that does not isolate Swiss companies but integrates them into the European framework. It will be crucial that new regulations are practical, differentiated and risk-based. Ongoing developments at EU level are pointing the way forward: according to the current timetable, revised legislation is expected in Switzerland in spring 2026.

 

Sources