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On the basis of a report, the Federal Council today evaluated the extent to which there is a need for Switzerland to adapt as a result of the dynamic developments in EU law in the area of sustainable corporate governance. The body has subsequently decided to prepare a consultation draft by July 2024 at the latest to examine the applicability of the new EU rules for ESG reporting. In the area of due diligence, however, it is still intended to wait. SwissHoldings welcomes this decision. It is true that the EU is planning a new law to monitor risks in value chains. However, the contours of this regulation are only beginning to emerge.

The Corporate Responsibility Initiative (CRI) was rejected at the ballot box in 2020. The main reason for the rejection was the initiative’s very far-reaching liability provisions, which were not coordinated internationally. The business community was relieved to see this. At the same time, the way was cleared for the broad-based counter-proposal. With its obligations for non-financial reporting and the sector-specific due diligence obligations, this counter-proposal was based on the current state of the law in the EU – with regard to child labor, it went beyond this. The EU adopted a further development of its non-financial reporting obligations at the beginning of this November. From the association’s point of view, the Federal Council has today logically decided to examine to what extent these new rules should also be directly applied in Switzerland. An indirect impact of the rules will arise on companies from third countries operating in the EU and generating more than EUR 150 million in sales in the EU in 2028.

Review to be based on established practice
SwissHoldings member companies have recently made significant efforts to implement the new reporting requirements under the counter-proposal. In addition, our members are currently additionally required to integrate the new provisions of the Climate Change Reporting Implementation Regulation (“TCFD”) recently adopted this November into their reporting. The business community is ready to make its contribution, but must first gain experience with these new rules. Against this backdrop, it is crucial that the Federal Council’s announced proposal does not overburden Swiss companies in terms of both material and time. In addition, it should be noted that the new EU directive not only significantly expands the reporting obligations for companies, but also places new demands on the reporting infrastructure and its embedding in the overarching context in general – with many questions still unanswered in this regard. For example, the establishment of new European sustainability reporting standards is planned, which should replace the international reporting guidelines previously used by companies, such as the Global Reporting Initiative (GRI). The connection of the new reporting rules with other EU regulations on sustainability, in particular the Taxonomy Regulation, has also not yet been conclusively clarified.

No advance in the area of due diligence
As of today, it is still open how due diligence processes in the area of “corporate responsibility” will be regulated in other European countries. Political observers assume that the contours of the new regulation are likely to become apparent in the next year and a half at the earliest. This timeframe will allow Switzerland to consider adapting its laws in line with the key parameters of the corresponding EU directive when the time comes. The association welcomes the fact that the Federal Council shares this assessment. Contrary to what is currently being argued by certain organizations, a regulatory gap will not arise because Swiss companies operating in the EU will in future be directly covered by EU regulations above a certain size as a result of the third-country regulation.

For information:
Denise Laufer│Member of the Executive Board │ 076 407 02 48
Pascal Nussbaum│Head of Communications & Public Affairs│079 798 52 40

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