Switzerland introduces mandatory climate disclosures

Large Swiss public companies, banks and insurance companies will be obliged to report on climate risks using a similar approach to the EU’s double materiality.

The Swiss Federal Council, the country’s executive government branch, last week adopted legislation that will require listed and financial companies to publicly disclose information on climate risks in line with the recommendations of the Task Force on Climate-related Financial Disclosures.

The new rules adopt an approach similar to the EU’s double materiality principle as Swiss companies will have to disclose the financial risks they incur because of climate-related factors, as well as the impact their business activities have on the environment.

The EU pioneered the double materiality approach in its sustainable reporting standards, with the-soon-to-be implemented Corporate Sustainability Reporting Directive that will gradually apply to around 50,000 EU companies from 2024. However, CSRD also includes impacts on social factors whereas the Swiss rules, which will also come into force in 2024, focus solely on climate issues.

The Swiss regulation will require companies to detail reduction targets for their direct and indirect greenhouse gas emissions and how they plan to implement them.

In a statement, the government admitted that “to date, Switzerland has lacked clear and comparable climate-related disclosures”. It added that “large companies’ transparency on the climate impact of their activities is a key aspect for the markets to function well and for climate sustainability in the financial sector”.

Public companies, banks and insurance companies with at least 500 employees and SFr20mn ($21mn) in total assets or more than SFr40mn in turnover will be subject to the new climate disclosure rules.

Other countries to have brought forward mandatory legislation in this area include the UK, which made TCFD reporting mandatory for all listed companies earlier this year. Similarly, New Zealand and Singapore have introduced compulsory TCFD-aligned reporting for major financial services companies, while Japan and Hong Kong have also extended climate risk reporting to large and listed companies.

Photo credit: Bloomberg