New Reporting and Due Diligence Requirements for Companies in Switzerland

“Moye White has been a part of Ally Law since 2005. This membership allows us to use the expansive network of more than 70 firms across the globe to provide our clients with local intelligence with a global breadth. In 2022, we are partnering with fellow Ally Law member firms across the globe for our International Insights blog series, where they will share insights and tips for doing business in their home country and beyond.

“Our third installment of International Insights comes from Gian Marchet Kasper of Blum & Grob in Switzerland. Blum & Grob is a celebrated commercial law firm with more than 50 employees. Located in the heart of Zurich, their breadth of experience ranges from Administrative Law, Corporate & Commercial Law, and Litigation to Restructuring, Tax, and Mergers & Acquisitions. 

-Paul Franke, President of Ally Law

Switzerland has introduced new reporting and due diligence requirements on "non-financial issues" with effect from 1 January 2022. This is intended to improve environmental and human rights concerns along the entire supply chain. The following presents the new regulations and the specific consequences for Swiss companies are discussed.


Following the rejection of the Corporate Responsibility Initiative on 29 November 2020, Switzerland enacted an amendment to the Code of Obligations with effect from 1 January 2022 through the indirect counter-proposal of the Parliament. Reporting obligations for large companies on non-financial matters were introduced.

In January 2021, Switzerland also became an official supporter of the Task Force on Climate-related Financial Disclosures (TCFD), a private initiative on "climate reporting" by companies. It is thus to be expected that both the circle of obligated parties and the content of the reporting obligations will be expanded in the future. The Federal Council plans to issue a consultation on mandatory climate reporting for large Swiss companies by summer 2022, with the aim of enforcement from 2024. Switzerland is thus adapting its legislation to international trends. It is primarily oriented toward the EU. The newly planned "EU Supply Chain Act" is likely to reignite discussions about tightening in Switzerland after its final decision.

Who Is Affected?

The new rules can be found in Art. 964a ff. of the Swiss Code of Obligations (CO). The reporting obligation applies to companies domiciled in Switzerland with an annual average of at least 500 full-time positions and a balance sheet total of CHF 20 million or sales revenue of CHF 40 million. In addition, there are transparency obligations for commodity companies as well as conflict materials and child labor.

What Is New?

The newly applicable regulations include comprehensive reporting obligations for all large companies (Art. 964a-964c CO). Due diligence and transparency obligations for conflict materials and child labor along the supply chain are also new (Art. 964j-964l CO). The reporting obligations for commodity companies (new Art. 964d-964i CO) have already been in force since 2021. They stem from the last revision of company law.

Start of Application/Sanctions

The regulations shall apply for the first time to the 2023 business year. Violation of the duties may result in a fine of up to CHF 100,000 (Art. 325ter SCC).

The Duties in Detail

The new law requires companies to account for environmental issues, in particular CO2 targets, social issues, labor issues, respect for human rights, and the fight against corruption. Companies are now required to prepare an annual report in a national language or in English on their business model, outlining the concepts and due diligence applied as well as existing risks regarding sustainability issues. The report must be approved and signed by the management or administrative body. It has to be published electronically and shall remain accessible for at least 10 years.

Commodity companies must also publicly report on payments (in the broadest sense) to government agencies amounting to at least CHF 100,000 per financial year. Companies transacting conflict materials (tin, tantalum, tungsten or gold) from conflict or high-risk areas into free circulation in Switzerland or processing them in Switzerland are subject to special due diligence obligations (management system to minimize harmful effects and reporting obligations). The same applies in the event of a justified suspicion of child labor in the supply chain.

Implementation of the Duties

The reporting obligations can only be fulfilled meaningfully based on ongoing and comprehensive risk management. Only data that is collected can also be reported. In this respect, there is an indirect obligation to collect data. First, it must be checked for which subject areas are relevant for the company. The law is very broadly defined for such purpose (Art. 964b CO).

The main task is to identify any risks that may arise, for example, from the region of activity, from the type of activity, from customary certifications and standards, and directly from legal systems. These must then be sorted according to their extent, scope, and irreversibility, and evaluated according to their probability of occurrence and severity. Subsequently, strategies and possible changes are to be conceptualized, implemented, and continuously reviewed in order to resolve the risks. These strategies are, in turn, incorporated into the follow-up report.

The report has to present the assessment process and its results, in addition to a general description of the business model and the presentation of concepts and measures planned and taken to mitigate the risks. As an internal measure, the establishment of codes of conduct and control mechanisms (reporting) as well as a human rights strategy, are recommended. All this information can be stored and managed centrally within the company in an ESG (Environmental Social Governance) charter. Externally, certain standards and reporting obligations of the contractual partners should (possibly in the future "must") already be insisted on in contract negotiations. Here it is advisable to work with model forms. 

Opportunities and Risks

A corporate structure aligned with sustainability criteria is advantageous in competition for several reasons. The long-term structural and monitored orientation leads to more resilience to disruptive events. The early recognition of future trends is possible through this setup. A company positioned in this way is technologically and economically a decisive step ahead. Financial advantages arise. Restructuring can be planned with a steady hand and thus be designed comprehensively and effectively. The content of the now obligatory sustainability reports will shape the public image of a company and thus have a direct influence on customer and business relations. In debt financing, public perception also has an influence on the terms of financing.

ESG will increasingly become a topic of discussion at general meetings of shareholders. Managing directors and board members should prepare themselves for this. The way in which sustainability issues are presented to shareholders can be crucial here, whether through mere informational hearings, planning mandates, or real alignment decisions.

Even for companies that are currently not subject to the existing and planned disclosure obligations, the question is not if but when they will be subject to an obligation for ESG reporting. For this reason alone, it is advisable to initiate the corporate transformation toward sustainability in terms of ESG criteria sooner rather than later. 

We are happy to support you with risk analyses tailored to your individual needs and in the sustainable orientation of your company.

Gian Marchet Kasper, Blum&Grob







Moye White