Switzerland proposes EU-aligned corporate sustainability act

Switzerland's Federal Council has opened consultations on a Sustainable Corporate Management Act that would bring the country's largest companies under EU-style due-diligence and reporting rules, according to ESG News. The draft is an indirect counter-proposal to the Responsible Business Initiative, a citizens' initiative the government considers overreaching and a threat to Swiss competitiveness.

The government says the aim is a coherent framework that fits international norms. The text tracks the EU's Corporate Sustainability Reporting Directive, its Corporate Sustainability Due Diligence Directive, and the Omnibus Directive. It is equally explicit about the ceiling: no exceeding EU requirements. Regulatory equivalence is the goal, with an eye to keeping Swiss firms from losing ground in global markets.

The act works in two tiers. The first imposes risk-based due-diligence duties on the very largest enterprises. A Swiss-based group qualifies if it has more than 5,000 full-time employees. It must also show global turnover above CHF 1.5 billion for two consecutive years, or pass thresholds tied to franchise and licensing income. Foreign companies are captured when their Swiss operations reach a similar scale.

Those companies would have to adopt a sustainability strategy and a code of conduct. They would identify and prioritize adverse impacts on the environment and human rights, then apply preventive and corrective measures. Grievance mechanisms would be mandatory, as would annual due-diligence reports.

A second, broader tier applies to companies with more than 1,000 employees. Their turnover must top CHF 450 million. These firms would file sustainability reports and undergo audits. Disclosures would follow EU standards or equivalent frameworks, with limited third-party assurance.

Scale is not the only trigger. The SCMA also attaches requirements to specific activities — conflict minerals and child labour — regardless of company size. Smaller firms sitting in those supply chains get compliance duties even though the act does not target SMEs directly. The government acknowledges they will feel indirect pressure anyway, via contract terms imposed by larger partners.

The political logic is plain. A moderate alternative to the Responsible Business Initiative lets the government claim real oversight while arguing it has saved Swiss competitiveness. The explicit nod to the Omnibus Directive shows Bern is calibrating to the EU regime as Brussels simplifies it. Practical, yes, and a way to brand the act as Brussels-compatible.

For asset managers, the proposal would bring EU-aligned reporting data to Swiss companies outside the bloc's direct reach. A portfolio company now filing no EU-aligned report would, under the act, disclose against the same standards. Cross-border ESG comparisons get easier for fund managers with European portfolios.

The open question is who judges equivalence. The act binds Swiss compliance to EU standards, but equivalence regimes are not symmetric: the rule-maker holds the pen. Switzerland is betting that aligning to the letter of CSRD and CSDDD costs less than fighting it. The consultation will show whether that bet pays off politically.