On January 1, 2024, the Climate Reporting Ordinance came into force. The Climate Reporting Ordinance is based on the indirect counterproposal to the Responsible Business Initiative (RBI) and provides large Swiss publicly traded companies, banks, and insurance companies with guidance and clarity on the information they must include in their climate reporting. This aims to increase transparency and make companies’ non-financial reporting more comparable.
Importance of Climate Reporting for SMEs
It is important to note that the ordinance was not developed in isolation. Essential provisions and orientations follow international trends in non-financial reporting, particularly the guidelines set by the EU. In addition to public reporting on the financial risks of climate change, the impacts of business activities should also be analyzed and disclosed. This concept forms the legal basis of our ESG reporting standard.
The strategy of the Swiss Federal Council is to align with international trends. At the same time, the current ordinance does not prescribe a standard for the disclosure of non-financial information. Due to the export dependency of Swiss companies, they will also align with the adopted EU guidelines on sustainability standards (archived here for you). This gives forward-looking Swiss companies a strategic competitive advantage.
Transparent Sustainability Reports as a Competitive Advantage
Many Swiss companies with activities in neighboring countries are forced to comply with the new European reporting standards. These regulations will also affect Swiss companies that do not have subsidiaries or branches abroad. The reason is that investors, consumers, and non-governmental organizations increasingly demand detailed and comparable information on sustainability. SMEs that are not directly subject to the ordinance are also part of the supply chain and should therefore consider standardized sustainability reporting (e.g., “Scope 3 emissions”). Proactive disclosure of non-financial information in line with European guidelines is an opportunity to stand out from the competition.
EU Regulations as a Guideline
Another reason to align with the EU is the expected regulatory alignment of Switzerland with the rules of the EU Corporate Sustainability Reporting Directive (CSRD). Together with the newly developed European Sustainability Reporting Standards (ESRS), the content and format of ESG reporting go far beyond what has been required in Switzerland to date. This includes qualitative and quantitative information about the past as well as information about the entire future value chain and corporate targets impacting sustainability.
The 2022 Proposal for a Directive on Corporate Sustainability Due Diligence (CSDDD) puts the Swiss legislator under new pressure (archived here for you). The CSDDD provides for a comprehensive approach that extends to environmental and human rights. According to the proposal, corporate due diligence requires extensive audits and increased liability. Swiss companies with significant activities in the EU must therefore consider compliance with these more extensive EU regulations.
The Swiss Federal Council sees the need to adapt national regulations to ensure legal certainty and maintain the competitiveness of Swiss companies in the future. However, since the CSDDD is still in the early stages of the legislative process, the Federal Council intends to continue observing its impact on Swiss companies for the time being. These announcements indicate further regulatory alignment with the EU. They are also in line with the provisions for reviewing existing Swiss sustainability regulations in light of international developments.
What Does This Mean for Swiss Companies?
A large part of the EU sustainability regulations will shape Swiss rules. For many companies, this means approaching sustainability reporting strategically and identifying risks. With increasing requirements for reporting processes, the need for qualified personnel to collect and analyze the necessary data also increases.
Hexem offers SMEs, in particular, an opportunity to respond flexibly and proactively to the changing regulatory environment without facing increased costs.
