Executive Takeaway

Switzerland has introduced a proposed Federal Act on Sustainable Corporate Governance that brings its sustainability reporting and due diligence requirements much closer to the EU model. While fewer companies will fall in scope, those that do will face significantly more rigorous and standardized expectations. For executives, this reflects a broader shift toward global alignment—and deeper scrutiny of ESG performance, particularly across supply chains.

Fewer Companies Covered, But With Higher Expectations

The proposal represents a deliberate narrowing of scope. Instead of covering companies with more than 500 employees, Switzerland would raise the threshold to organizations with at least 1,000 employees and CHF 450 million in revenue. This effectively cuts the number of in-scope companies roughly in half.

However, this is not a relaxation of expectations. Companies that remain in scope will now be required to report using European Sustainability Reporting Standards (ESRS) or an equivalent framework. In practice, this means more structured, comparable, and audit-ready disclosures. The shift is less about reducing compliance and more about concentrating regulatory attention on large companies with the greatest potential impact.

Clear Alignment with EU Regulation

The Swiss proposal is heavily influenced by recent developments in the EU, particularly the Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive. Both of these frameworks have recently been scaled back under the EU’s “Omnibus I” process, which raised reporting thresholds and limited due diligence requirements to the largest companies.

Switzerland is effectively mirroring this approach. By aligning thresholds and expectations, it reduces fragmentation for companies operating across European markets. For multinational organizations, this consistency is meaningful—it allows for more streamlined compliance strategies across jurisdictions rather than managing multiple divergent frameworks.

Reporting Requirements Become More Structured

Switzerland already has a foundation of sustainability disclosure requirements, including obligations for companies to report on environmental, social, human rights, and anti-corruption topics. It also mandates climate-related disclosures aligned with the Task Force on Climate-related Financial Disclosures.

What changes under the new proposal is the level of rigor. Rather than allowing flexibility in how companies report, the move toward ESRS introduces a more prescriptive structure. Disclosures will need to be more detailed, standardized, and comparable across companies, which increases both the effort required to prepare reports and the level of scrutiny they may face from regulators and stakeholders.

Due Diligence Expands Into the Supply Chain

Perhaps the most significant shift is in due diligence. Historically, Switzerland’s requirements have been relatively narrow, focusing primarily on specific risks such as child labor and conflict minerals. The proposed law expands this significantly.

Under the new framework, the largest companies, those with more than 5,000 employees and CHF 1.5 billion in revenue, would be required to assess and manage environmental and human rights risks not only within their own operations, but also across their supply chains. This includes identifying potential impacts, implementing preventive measures, addressing actual harm, and establishing mechanisms for complaints and monitoring.

This change moves ESG beyond disclosure into the realm of operational accountability. Companies will need to demonstrate that they are actively managing risks, not simply reporting on them.

What This Means for Multinational Companies

For U.S.-based and other global companies, the practical impact depends on how their Swiss entities are structured and whether they meet the new thresholds. However, the broader takeaway is that Switzerland is not introducing a unique framework, it is aligning with the EU.

For companies already preparing for CSRD or CSDDD compliance, this alignment should simplify implementation rather than complicate it. That said, organizations will still need to evaluate whether specific Swiss entities fall in scope and ensure that reporting and due diligence processes are consistently applied across jurisdictions.

Even for companies that fall outside the Swiss thresholds, the direction of travel is clear. Supply chain expectations are becoming more stringent globally, and companies may still feel indirect pressure from business partners or EU-based requirements.

Bottom Line

Switzerland’s proposal reinforces a clear global trend: ESG regulation is becoming more standardized, more rigorous, and more focused on large companies with significant impact. The reduction in scope should not be mistaken for deregulation. Instead, it reflects a shift toward deeper accountability, particularly in how companies manage environmental and human rights risks across their operations and value chains.

For ESG and legal leaders, the priority now is ensuring that internal systems, governance, risk management, and reporting, are robust enough to meet increasingly aligned global standards.