12 September 2022

ESG: Federal Council pushes TCFD for climate reporting

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Swiss public companies, insurance companies and banks that employ at least 500 employees and have a balance sheet total of more than 20 million Swiss francs or sales revenues of more than 40 million Swiss francs must disclose climate issues in accordance with TCFD.

In 2017, the international expert commission "Task Force on Climate-related Financial Disclosures" (TCFD) published its recommendations for more uniform climate reporting. These recommendations are internationally recognized. To date, the TCFD, which is made up of representatives from leading companies in the global economy, has the support of around 2700 signatory states and organizations at the international level. Switzerland officially pledged its support to the TCFD on January 12, 2021. On August 18, 2021, the Federal Council also adopted the benchmarks for future mandatory climate reporting by large, national companies and instructed the Federal Department of Finance (FDF), together with other federal agencies, to prepare a consultation draft by summer 2022. The government has decided to specify this requirement by means of a separate ordinance, which will enter into force on January 01, 2023, and the accompanying explanatory report, and to implement the reporting on environmental and climate issues within the framework of transparency on non-financial matters (Art. 964bis Swiss Code of Obligations, Report on non-financial matters) based on the TCFD recommendations. The first reporting period covers the following financial year 2024 (information provided by telephone by the State Secretariat for International Finance, SIF). In the future, public climate reporting is to apply to publicly traded companies, insurance companies and banks that employ at least 500 people and have a balance sheet total of more than CHF 20 million or sales revenue of more than CHF 40 million. On one hand, the public report must include the financial risk that a company incurs through climate-related activities. On the other hand, it must disclose the impact of the company's business activities on the climate and the environment. Minimum requirements are intended to ensure that the disclosures are meaningful, comparable, and, where possible, forward-looking and scenario-based.

The Federal Council sees great opportunities in a sustainable Swiss financial center, with transparency from large companies on the climate impact of their activities being a key element for sustainability in the financial sector. The benefit of this ordinance for the public lies primarily in the availability of precise and comparable data relating to climate issues and climate targets. The more meaningful and comparable the risks and impacts of the business activities of large corporations on the climate are disclosed, the better informed decisions can be made by investors, customers, policyholders, politicians and regulators. As a result, financial flows can be more climate-friendly and greenhouse gas emissions can be reduced. For companies, TCFD reporting has a direct impact on ESG ratings.


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