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Switzerland Leads The Way On ESG Reporting

From January 2022, Switzerland will impose one of the most demanding regulatory environments when it comes to non-financial reporting. Companies based in the country will be expected to document everything from the impact they have on the environment to the way that they treat their employees. Like most matters in Switzerland, the decision to implement […]

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From January 2022, Switzerland will impose one of the most demanding regulatory environments when it comes to non-financial reporting. Companies based in the country will be expected to document everything from the impact they have on the environment to the way that they treat their employees.

Like most matters in Switzerland, the decision to implement these new rules was taken by public vote. Back in 2016, a group called the Responsible Business Initiative suggested that a new set of rules be brought in – but these weren’t the rules which ultimately went into force. Instead, the Swiss Parliament put forward a series of counter-proposals in June 2020, which were ultimately adopted after the Responsible Business Initiative was rejected at the ballot box.

The reporting requirement where ESG is concerned is based on the EU’s Non-Financial Reporting Directive (2014/95), which has companies make similar reports.

Reporting Requirements

So, what do the new rules require that companies report?

  • Business Model
  • This covers how the business is constituted, and how it expects to make money. 
  • Risk Assessment
  • Companies are expected to assess their own ESG risks, and to include this assessment in its reporting. This should also cover the relationships it has with other businesses, and the ESG-relevant impact that its products and services might be expected to have.

Policies and due diligence

What is the company actually doing to mitigate these risks? If a company has identified risk, and not actually implemented any policy changes in response to them, then it can’t be said to be taking ESG very seriously.

In cases where such policies are no present, then a good explanation must be offered in their stead. It might be that certain kinds of identified risk don’t happen to be relevant to the company in question – though regulators might take a different view.

Outcomes

Were the policies implemented successful in assuring a better ESG outcome? Companies might use a series of Key Performance Indicators to determine whether their ESG policies are effective.

Language and time requirements

The report can be written either in English or in one of the Swiss national languages. It must be made available to the public for at least a decade. To ensure that the report is written to the required standard and contains all of the relevant information, firms might elect to work alongside a lawyer with experience in ESG strategy.

Who has to comply?

These rules, naturally, don’t apply to every single company in Switzerland. Companies must be domiciled in Switzerland, but they must also be of public interest, they must have more than 500 FTEs, and revenues of more than forty million Swiss francs over a two-year period (or, assets in excess of twenty million francs).

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