ESG reporting for Swiss companies: latest developments

After the attempt by the Swiss Federal Council to step up ESG reporting and due diligence obligations and to align national law with the EU framework in 2024, the government halted the legislative process as a result of the bloc’s adoption of the Omnibus package. The draft of a new statute, designed as an indirect counterproposal to a popular initiative aiming to heighten the disclosure and due diligence obligations for companies, takes the latest developments in the EU into account. It tries to strike a balance between the public interest for large companies in ESG reporting and due diligence and the burden on the subject companies.

The range of Swiss entities required to engage in ESG reporting – referred to in Swiss legal terms as “non-financial reporting” – is more limited than that applied within the EU. The obligation to produce a non-financial report is imposed on prudentially regulated financial institutions and Swiss public enterprises that meet the following criteria:

• A minimum of 500 full-time employees annually over two consecutive years; and

• A consolidated balance sheet total of at least CHF 20 million or a consolidated annual turnover of at least CHF 40 million, calculated over the same period.

Public enterprises encompass not only those with equity securities listed on a stock exchange but also Swiss companies with outstanding bonds, as well as entities that contribute at least 20% of assets or turnover to the consolidated accounts of listed companies or those with bonds in circulation. Furthermore, any enterprise controlled by a parent company subject to the reporting requirement, or that is obliged under foreign legislation to prepare a comparable report, is exempt from the Swiss non-financial reporting mandate. In-scope Swiss companies must publish and submit the report on non-financial matters to the body responsible for approving the annual financial statements, which is typically the annual general meeting of shareholders.

It is worth noting that, notwithstanding a prevailing trend in the US under the Trump administration – and similar movements elsewhere – towards curtailing public sustainability and ESG initiatives, ESG considerations remain a central concern for institutional investors. Consequently, Swiss listed companies are advised to continue to uphold robust standards of transparency in their reporting practices. In particular, proxy advisers continue to apply strict rules and stringent standards to non-financial reporting and, in certain areas, have further emphasised their expectations; Ethos even increased its standards.

As of this year, the five-year transition period for gender representation on boards of directors under the Swiss Code of Obligations has expired. Swiss listed companies exceeding the relevant thresholds must now meet a 30% gender quota for their boards, or explain any shortfall and outline planned measures. The 20% quota for executive management remains subject to a transition period until 2031, when similar ‘comply-or-explain’ rules will apply.

The popular Swiss initiative “For responsible large businesses – protecting human rights and the environment” (commonly referred to as the Responsible Enterprises Initiative 2.0) was launched and submitted in 2025. It represents a renewed attempt to introduce binding corporate responsibility rules following the failure of the first initiative in 2020, which obtained a popular majority but did not secure the required majority of cantons.

In short, the initiative seeks to anchor comprehensive human rights and environmental due diligence obligations at the constitutional level for large Swiss enterprises. It does not define the obligations in detail; instead it tasks the federal government to promulgate rules in line with international developments, particularly in Europe. The initiative requires risk-based due diligence across the entire value chain – including the identification, prevention, and mitigation of adverse human rights and environmental impacts – as well as transparent public reporting. Furthermore, subject companies will have to set a binding CO₂ target, which is in line with the 1.5°C climate target.

A key and controversial element is the proposed civil liability regime. Swiss companies would be liable for damage caused by entities they control abroad. The initiative aims for an “effective” legal protection and an appropriate framework for the presentation of evidence without further specifying these principles. The draft constitutional provision thus envisages a significant extension of corporate responsibility beyond Swiss territory, raising questions of extraterritorial application of national law, burden of proof, and evidentiary challenges before Swiss courts.

The initiative further provides for independent public supervision and empowers the legislature to adopt sector-specific rules for high-risk industries.

After the Swiss government halted its legislative process to ensure alignment with EU law in connection with the Omnibus package, the Responsible Enterprises Initiative 2.0 triggered an indirect counterproposal in late 2025. On April 2 2026, the Swiss Federal Council published a preliminary draft of a Federal Act on Sustainable Corporate Governance (Bundesgesetz über die nachhaltige Unternehmensführung, or NUFG) and opened a public consultation running until July 9 2026.

Subject to the legislative process, the draft sets forth a two-year transition period after entry into force. The counterproposal aims to strengthen corporate responsibility without amending the Swiss Constitution, while ensuring close alignment with the EU’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) as revised by the Omnibus package. It takes into account the recent EU Omnibus package and the criticism raised in response to its previous proposal, which had been submitted for public consultation before the legislative process was halted.

In sum, the draft NUFG expands the Swiss rules on sustainability reporting and corporate due diligence, currently enshrined in the Swiss Code of Obligations. Reporting obligations would apply to large Swiss enterprises with more than 1,000 full-time employees and global turnover exceeding CHF 450 million on a consolidated basis during two consecutive years, as well as certain foreign companies generating significant turnover in Switzerland (i.e., controlled entities or Swiss branches of non-Swiss enterprises generating more than CHF 450 million on the Swiss market during two consecutive years). Reporting would be aligned with the CSRD/European Sustainability Reporting Standards framework or equivalent recognised standards and, for the first time under Swiss law, be subject to mandatory limited external assurance by licensed audit firms. Existing sector-specific due diligence regimes – most notably for conflict minerals and child labour – would continue to apply.

For human rights and environmental due diligence, the counterproposal adopts a risk-based approach for a narrower category of very large Swiss undertakings with more than 5,000 employees and turnover exceeding CHF 1.5 billion worldwide during two consecutive years or undertakings that have generated revenue from licensing or franchise agreements exceeding CHF 75 million and worldwide sales of more than CHF 275 million with independent third companies provided that these agreements ensure a common identity, a common business concept, and the application of uniform business methods).

The counterproposal also includes third-country regulation applying to non-Swiss enterprises that generated sales revenue of more than CHF 1.5 billion on the Swiss market or more than CHF 75 million from franchise or licensing agreements and sales revenue of more than CHF 275 million on the Swiss market with independent third parties provided that these agreements ensure a common identity, a common business concept, and the application of uniform business methods. Companies would be required to identify, prioritise, and address the most severe and likely adverse impacts along their own operations and their chain of activities. In contrast to the constitutional model proposed by the initiative, the draft law takes a more calibrated approach to civil liability, linking liability to demonstrable failures of due diligence while avoiding a broad, constitutionally entrenched group liability regime.

A defining feature of the counterproposal is its oversight and enforcement architecture. Supervision would be exercised at federal level by a Federal Audit and Sustainability Oversight Authority, building on the existing audit oversight framework. For sustainability reporting, enforcement focuses on formal completeness, internal consistency, and assurance; the mandatory limited audit is conceived as the first line of control. For due diligence obligations, supervision is explicitly process oriented, assessing whether companies have implemented adequate governance structures, risk analyses, preventive measures, and remediation mechanisms.

Taken as a whole, the Federal Council presents the indirect counterproposal as a more pragmatic, EU‑aligned, and institutionally manageable alternative to the popular initiative. By adopting a restrained approach to civil liability, the draft NUFG is intended to modernise Swiss ESG regulation while avoiding far‑reaching extraterritorial adjudication. However, it is questionable whether an additional public law supervision and the extension of certain duties to non-Swiss enterprises doing business in Switzerland are appropriate measures to elevate ESG in Switzerland: The mandatory limited audit does not call for an additional public body adding a second layer of review and foreign enterprises doing business in Switzerland are often subject to the corresponding EU rules. The last say will be with the Swiss people, who will have the chance to vote on the initiative and the indirect counterproposal.

While the Federal Council tries to align Swiss law with the corresponding EU requirements in order to facilitate compliance for Swiss companies, some might already be within the scope of certain EU rules. In February 2025, the European Commission published the Omnibus I sustainability simplification package, which entered into force on March 18 2026. Omnibus I significantly streamlines the CSRD and CSDDD by raising the applicable thresholds.

Although Omnibus I substantially reduces the number of EU companies within scope, it preserves the group-level reporting obligation for non-EU undertakings with significant economic activity in the EU.

Under the revised framework, a Swiss parent company becomes subject to the CSRD if it generates more than €450 million in net turnover within the EU and if at least one EU subsidiary or branch generates more than €200 million in turnover in the preceding financial year. In such a case, the Swiss parent must prepare a CSRD-compliant sustainability report at group level, even though it is domiciled outside the union. As a result, a Swiss company may be subject to ESG reporting under EU law, irrespective of whether it falls under the corresponding Swiss rules.

While the future regime applicable to Swiss companies in the area of ESG reporting and related due diligence obligations is still unclear, a few trends may already be identified. In particular, the Swiss Federal Council aims to closely align Swiss law with EU law, while preserving institutional proportionality and legal certainty. Furthermore, Swiss law is moving from fragmented ESG regulation to a more comprehensive set of rules.

In the medium term, a dynamic alignment of Swiss law with EU standards is expected. Hence, the overhaul of the current legislation will likely not be the last one. A constant in the legislative process is the inclusion of reliefs or exemptions for SMEs, particularly where additional layers of liability or administrative burden could undermine competitiveness or disproportionately affect such enterprises, which is debated in each legislative process.

Given the extraterritorial reach of the CSRD and CSDDD, some large Swiss companies are already subject – directly or indirectly – to EU sustainability requirements; others follow voluntarily because of investor expectation.

With Switzerland being slower than the EU in the implementation of ESG reporting obligations, it is to be hoped that it seizes the opportunity to take into account the lessons learnt from the union and maintains a practical approach for Swiss companies. Furthermore, the past has shown that investors are often leading companies on the scope and content of non-financial reports, with Swiss law reproducing what investors have already asked for. In particular, larger Swiss companies tend to adopt the EU standard on a voluntary basis as their investor base often asks for a report that is comparable to those of EU-incorporated companies.

Given these trends, ESG will remain an area of focus for Swiss companies in the upcoming years.