Switzerland: Government Starts Consultation on Climate-Related Financial Disclosure Ordinance

Switzerland: Government Starts Consultation on Climate-Related Financial Disclosure Ordinance

On March 30, 2022, the Swiss Federal Council (government) started a consultation on an ordinance on climate-related financial disclosures for large Swiss companies. The ordinance specifies and standardizes existing disclosure duties of nonfinancial matters codified in the Swiss Code of Obligations and is a binding implementation of the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). Climate-related matters include climate-related risks to which the company is exposed as well as risks to the climate resulting from the activities of the company. (Ordinance art. 1, para. 2.)

The consultation will end on July 7, 2022. The ordinance is slated to enter into force at the beginning of 2023.

Background to the Ordinance

On November 29, 2020, the popular initiative “For Responsible Businesses – Protecting Human Rights and the Environment” (Responsible Business Initiative) failed to reach the necessary majority for approval in Switzerland. The initiative aimed to introduce stricter statutory requirements for Swiss businesses abroad to comply with human rights obligations and environmental standards. The Federal Assembly (parliament) submitted an indirect counterproposal that, among other things, amended the Code of Obligations to require certain big companies to include in their annual reports the risks to the environment resulting from their business models, in particular information on carbon dioxide goals, social issues, employee-related issues, respect for human rights, and combating corruption. (Code of Obligations arts. 964a, 964b.) That part of the indirect counterproposal is modeled on the European Union’s (EU’s) Non-Financial Reporting Directive (NFRD). The provisions implementing the indirect counterproposal entered into force on January 1, 2022.

The ordinance standardizes climate-related financial disclosure requirements for these companies to make them more comparable and prevent “greenwashing.” (Explanatory Report at 5.)

Related Developments

On March 21, 2022, the U.S. Securities and Exchange Commission published a proposed rule to enhance and standardize climate-related financial disclosures that is also modeled in part on the TCFD recommendations. The comment period will end on May 20, 2022.

In January 2019, the European Commission published new nonbinding climate-reporting guidelines for companies, which integrate the TCFD recommendations. On February 23, 2022, the European Commission published a proposal for a Directive on Corporate Sustainability Due Diligence. The European Financial Reporting Advisory Group is tasked with preparing detailed EU sustainability reporting standards that take account of global standard-setting initiatives, such as the TCFD recommendations.

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