Switzerland has released a draft Federal Act on Sustainable Corporate Governance that would significantly reshape sustainability reporting and due diligence obligations for large companies, while also bringing Swiss rules much closer to the European framework now applied under the EU’s revised sustainability legislation. The proposal would raise the threshold for sustainability reporting to companies with at least 1,000 employees and CHF 450 million in revenue, and would introduce broader due diligence obligations for companies with at least 5,000 employees and CHF 1.5 billion in revenue.

The timing is important because the Swiss proposal comes after the EU’s Omnibus I changes substantially narrowed the scope of both the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive. Switzerland is now effectively following that recalibrated European direction rather than building its own separate reporting architecture. That matters for Swiss companies because the country’s sustainability rules are being adjusted not only to domestic policy preferences, but also to preserve regulatory comparability with the EU, which remains the main external reference point for Swiss corporate disclosure and governance policy.

The Reporting Scope Will Narrow, But Standards Will Become More Formalized

Under the proposed framework, sustainability reporting obligations would apply to roughly 100 companies, compared with around 200 companies currently subject to Swiss reporting and climate disclosure requirements. Reporting would need to follow the European Sustainability Reporting Standards or an equivalent framework, which would make the reporting burden more concentrated on larger companies but also more aligned with formal international expectations.

This is a meaningful shift in Swiss policy design. The country already has sustainability reporting rules for companies with more than 500 employees, including obligations to publish annual information on environmental, social, human rights, and anti-corruption matters, as well as separate climate disclosure obligations based on TCFD recommendations. The new proposal would reduce the number of companies covered, but for those still in scope it would move reporting onto a more structured and internationally comparable footing.

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Due Diligence Rules Would Expand Well Beyond Today’s Narrower Swiss Regime

Switzerland’s current due diligence rules are largely limited to child labour and conflict minerals risks. The proposed new law would expand that logic significantly for the largest companies by requiring them to examine whether their own activities, those of controlled companies, or those of business partners in the supply chain could create actual or potential negative impacts on internationally recognized human rights and environmental standards. The Federal Council expects these due diligence obligations to apply to around 30 companies.

The obligations would also be considerably more operational than the current regime. In-scope companies would need to establish a strategy and code of conduct, integrate those into policy and risk management, identify and prioritize impacts, prevent potential harms, remediate actual harms, create complaint and reporting mechanisms, and monitor the effectiveness of their measures. In practical terms, that means the proposal is not only about disclosure. It is about embedding sustainability-related due diligence into governance systems, internal controls, and supply chain oversight in a way that resembles the broader direction of the EU due diligence regime.

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Switzerland Is Choosing Alignment Over Divergence

The broader significance of the proposal is that Switzerland appears to be choosing regulatory alignment with Europe over a distinct standalone route, even after the EU itself softened its original sustainability requirements. That is a pragmatic move. Swiss companies with EU exposure already face strong pressure to remain compatible with European standards, and a materially different domestic system could have created complexity without offering much competitive advantage.

At the same time, the proposal shows that Switzerland is trying to balance competitiveness concerns with continued expectations around corporate responsibility. By limiting the new rules to larger companies, the government is narrowing the compliance population. But by requiring ESRS-style reporting and broader due diligence for the biggest groups, it is also signaling that sustainability governance remains part of mainstream corporate regulation rather than a temporary reporting trend. For Swiss business, the likely takeaway is clear: the number of companies in scope may fall, but those still covered should expect a more formal and policy-integrated sustainability governance regime in the years ahead.

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