Switzerland Tests a Softer Path on Corporate Accountability With New Sustainability Law Proposal

Key Takeaways

• Focused Scope on Large Firms: Around 30 large Swiss companies would face new due diligence requirements on human rights and environmental risks.
• SMEs Largely Spared: Smaller businesses are not directly subject to the new obligations, reflecting a deliberate effort to limit regulatory burden.
• Closer Alignment With EU Rules: The proposal draws heavily on European standards to keep Swiss companies competitive internationally.
• Tighter but Narrower Reporting: Fewer companies will be required to publish sustainability reports, but those that do must have them externally audited.
• Liability Still in Play: Two options on parent company liability are on the table, setting up a key debate during consultation.

Deep Dive

The Swiss Federal Council has opened a consultation on a proposed Federal Act on Sustainable Business Management, setting out a new framework that would require large Swiss companies to strengthen oversight of human rights and environmental risks in their operations.

The consultation, which began April 1 and will run through July 9, 2026, marks the next step in Switzerland’s effort to formalize corporate sustainability obligations while maintaining competitiveness in domestic and international markets.

The proposal is structured as an indirect counter-proposal to the Responsible Business Initiative, which the Federal Council has recommended rejecting.

Targeted Scope Focused on Large Companies

Under the proposed law, new due diligence requirements would apply to approximately 30 large Swiss companies. These firms would be required to identify risks linked to their activities and take appropriate measures to address them, particularly in relation to human rights and environmental impacts.

This would expand the current framework, which limits due diligence obligations to specific high-risk areas such as child labor and conflict minerals.

Small and medium-sized enterprises would not be directly subject to these new requirements, reflecting a policy decision to limit compliance burdens on smaller businesses.

Sustainability Reporting Requirements Refined

The proposal maintains Switzerland’s existing non-financial reporting requirements, which would be reclassified as sustainability reporting. Companies in scope would continue to disclose information on environmental, social, and governance matters, including human rights, personnel issues, and anti-corruption measures.

However, the number of companies required to report would be reduced to around 100, compared to approximately 200 under the current regime.

Those that remain subject to the requirements would face an additional obligation to have their sustainability reports audited by an external auditing firm.

Oversight and Alignment With International Standards

A national supervisory authority would be responsible for monitoring compliance with both due diligence and reporting obligations. The Federal Council has proposed assigning this role to Switzerland’s auditing supervisory authority.

The proposed law is also designed to align with recognized international standards, particularly those in the European Union, reflecting the importance of regulatory consistency for Swiss companies operating across borders.

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