Switzerland aims to align its legislation with that of the EU, specifically the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). It seeks to avoid the ‘Swiss finish’ (where Swiss regulations end up being stricter than those in the rest of Europe).
The Swiss Federal Council is currently conducting a public consultation on the draft Federal Act on Sustainable Corporate Governance (known by its German acronym NUFG or in English as SCGA / CSA). This move marks a key milestone in the country’s ESG (Environmental, Social and Governance) regulation and serves as an indirect counter-proposal by the Government to the popular initiative ‘For Responsible Multinationals 2.0’ (submitted by civil society in 2025), which the Government considers too extreme for the country’s competitiveness.
The key points of this draft bill are:
1. Strict alignment with the European Union (no ‘Swiss finish’)
The Swiss Government’s main objective is to harmonise its legislation with European Union regulations, specifically the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The Federal Council has made it clear that it seeks to avoid the ‘Swiss finish’ (a term used to refer to Swiss regulations that end up being stricter and more isolated than those in the rest of Europe), ensuring that local companies compete on a level playing field with their European counterparts.
2. Two distinct thresholds (Reporting versus Due Diligence)
The law divides obligations according to the size of the corporation to protect small and medium-sized enterprises (SMEs):
· For Sustainability Reports: This will apply to companies with more than 1,000 full-time employees and a global turnover exceeding 450 million Swiss francs (CHF). (It is estimated that this will affect around 100 large Swiss companies). Interestingly, this narrows the scope of companies currently required to report under the Swiss Code of Obligations, exempting smaller listed companies.
· For Due Diligence (Supply Chain): Environmental and human rights monitoring obligations will be much stricter and will apply only to corporate giants with more than 5,000 employees and a turnover of more than 1,500 million CHF (directly affecting the country’s approximately 30 largest multinationals).
3. Civil Liability: The most controversial issue
The draft bill tackles a historically contentious issue in Switzerland: should the Swiss parent company be held liable for damage caused by its subsidiaries abroad? The text put out for consultation sets out options open for debate, including an explicit civil liability rule if the claimant can demonstrate that the parent company failed to fulfil its due diligence obligations.
4. State supervision and severe sanctions
Unlike the previous self-regulatory model, the draft proposes the creation of a state supervisory authority with real and strict sanctioning powers. Its powers include:
Imposing fines of up to three per cent of the company’s global net turnover in the event of serious breaches.
Confiscating profits obtained through the infringement.
Excluding offending companies from public procurement contracts for a period of up to five years.
Next steps in the legislative timetable
The public consultation process will remain open until 9 July 2026. During this period, political parties, business associations and NGOs will submit their submissions (with civil liability and the scope of companies covered set to be the main points of contention). The Federal Council has until 27 November to formally submit the final draft bill and the accompanying explanatory memorandum to the Swiss Parliament for debate and subsequent approval.
