The current Swiss regulatory framework is based on the EU Non-Financial Reporting Directive (NFRD), the EU Regulation on supply chain due diligence obligations for importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas and the proposal of the Dutch Child Labour Due Diligence Act. In the meantime, however, the EU has revised the NFRD and it will be replaced by the Corporate Sustainability Reporting Directive (CSRD). In addition, the EU is preparing a new directive on corporate sustainability due diligence obligations (as currently proposed, CS3D). Against this background, the Swiss Federal Department of Justice has analysed and compared the CSRD, the CS3D and the Swiss rules to gain a better understanding on relevant deviations and the impact of the EU regulations on Swiss companies. The key elements of this report and the next steps as proposed by the Swiss Federal Council are summarised below.

Due diligence obligations

The scope of the CS3D is broader than the Swiss rules to the extent that (i) the CS3D covers a wider range of companies, including non-EU undertakings conducting business in the EU, (ii) the due diligence obligations under the CS3D cover “human rights” and “environment” in general, while the Swiss rules are limited to due diligence obligations in the area of child labour and conflict minerals, (iii) the CS3D defines certain risk sectors, whereas the Swiss rules refer to risk countries and (iv) the supply chain scope where the CS3D due diligence obligations have to be applied is broader than under the Swiss rules.

As a major change under the CS3D, the EU member states are obliged to establish a national, independent supervisory authority which shall be vested with the power to, inter alia, impose administrative fines as well as the termination of the violation of the due diligence obligations, an obligation to omit future violations or other remedial measures. Under Swiss law it is currently only possible to impose monetary or criminal sanctions. To ensure that the supervisory authorities can effectively contact a company, non-EU companies will have to designate an authorised person to receive, comply and enforce legal acts under the CS3D.

Based on the CS3D companies may under certain circumstances be held liable for damages resulting from the violation of due diligence obligations. The liability may also cover violations on the level of subsidiaries and supply chain partners. The CS3D liability provisions are to be implemented with overriding mandatory application meaning they shall also apply even if a damages claim is not governed by EU law. Under the Swiss rules no such liability concept exists and, in particular, damages suffered abroad are governed by the law of such foreign country.

Reporting obligations

The scope of the CSRD is significantly wider than that of the NFRD (which applied only to ‘large’ public interest entities), thereby making many more companies subject to sustainability reporting obligations under the CSRD. The CSRD shall apply to the following three categories, subject to limited exceptions:

  • All companies listed on an EEA regulated market;
  • All ‘large’ (non-listed) undertakings (i.e., more than 250 employees and/or more than EUR 40m net turnover and/or more than EUR 20m assets (2 out of 3)); and
  • Certain non-EU undertakings with a minimum net turnover of EUR 150m generated within the EU and which have a subsidiaries or a significant branch in the EU (i.e. generating at least EUR 40m in net turnover).

Under Swiss law, the reporting obligations currently apply to public interest companies (i.e. listed entities and companies supervised by the Swiss Financial Market Supervisory Authority FINMA) and large companies. The applicable thresholds for ‘large’ companies are set at 500 full-time employees, a CHF 40m turnover and CHF 20m assets.

Companies will have to report on (i) how sustainability aspects affect their business development, performance and position (“outside-in-perspective”) as well as (ii) how sustainability aspects of a company’s activities affect humans and the environment (“inside-out-perspective”). The Swiss sustainability reporting obligations do not refer to double materiality.

According to the CSRD rules, all information relevant to understand a company’s impacts on sustainability matters, and how sustainability matters affect the company’s development, performance and position have to be reported. The information has to be of a forward-looking as well as retrospective, qualitative as well as quantitative nature. Art. 19a(2) of the CSRD contains a specific list of reportable information, which is more extensive than the Swiss reporting obligations.

Undertakings that fall within the scope of the CSRD must prepare their sustainability reports in accordance with the European Sustainability Reporting Standards (ESRSs) prepared by the European Financial Reporting Advisory Group (EFRAG). It is expected that these ESRSs will become particularly relevant for certain industries where industry-wide standards will be implemented. Under Swiss law it is not possible to enact such mandatory standards. However, the Federal Department of Finance has prepared an ordinance to implement the internationally recognised recommendations of the Task Force on Climate-related Financial Disclosures (TCDF), which will enter into force on 1 January 2024.

Under the CSRD the sustainability report will be subject to an external audit. Under Swiss law only the report on conflict minerals has to be submitted to an “independent expert” to verify compliance with the applicable due diligence obligations.

The entering into force of the CSRD will lead to the enactment of additional sanctions such as the publication of the responsible persons and violations of a company, the obligation to terminate or omit violating activities and monetary sanctions. The size of monetary sanctions will be in the competence of the EU member states. Under Swiss law monetary sanctions of up to CHF 100,000 can be imposed.

On 19 December 2022, the CSRD was published in the Official Journal of the EU and will enter into force on 8 January 2023 following which EU member states shall have 18 months to implement the CSRD in national legislation. The application of the CSRD shall be phased in as follows:

  • 1 January 2024 for companies currently within NFRD scope (reporting in 2025)
  • 1 January 2025 for large companies currently outside NFRD scope (reporting in 2026)
  • 1 January 2026 listed SMEs and other undertakings (SMEs may opt out until 2028)
  • 1 January 2028 non-EU undertakings without an EU regulated market listing (reporting in 2029)

Impact of the CS3D and CSRD on Swiss companies

Swiss companies with a presence and minimum turnover in the EU are potentially covered by the scope of the CSRD and CS3D. In addition, small and mid-sized companies may be affected if business parts require them to comply with certain obligations. This will lead to extra work to ensure that the EU and Swiss due diligence and reporting obligations are aligned and complied with in the company’s operations. As a consequence, Swiss companies are potentially exposed to liability risks and sanctions under EU law.

The application of the EU directives on Swiss companies leads to new liability risks, extended due diligence and reporting obligations as well as obligations to appointment of a proxy in the EU, conduct an external audit and comply with a specific electronic reporting format. The EU directives also foresee additional sanctions currently not known in the Swiss legal ESG framework.

Position of the Swiss Federal Council

The Swiss Federal Council confirmed that the Swiss rules should be aligned with international rules. As concerns the due diligence obligations the Swiss Federal Council plans to conduct an in-depth analysis of the CS3D until end-2023 to ensure that Swiss companies will not suffer from any competitive disadvantage. In relation to the reporting obligations the Swiss Federal Council expects that the Swiss rules need to be amended and decided to draft a proposal until July 2024.



  • Press release of the Swiss Federal Council (in German): Click here
  • Report of the Swiss Federal Department of Justice (in German): Click here

If you have any questions on the topic of ESG under Swiss or EU law, please contact Menno Baks. Loyens & Loeff provides tailor made expert solutions to ensure that our clients are covered from a risk management perspective up to a full integration of ESG into strategy and operations. Among others, we can assist with gap analyses, legal review of ESG policies, legal questions on duties and liability risks for directors, and transactional ESG due diligences. Originally published by Valérie Schrämli and Menno Baks.