The rejection of the Corporate Responsibility Initiative (CRI) means that the Federal Assembly's indirect counter-proposal is now being considered. This means that there is a need for action by the Boards of Directors.
The federal popular initiative ""For responsible companies - to protect people and the environment"", or Corporate Responsibility Initiative (CRI) in short, was rejected. This means that the indirect counter-proposal of the Swiss Federal Assembly has been accepted. As a next step, the resolution ""Code of Obligations - indirect counter-proposal to the Popular Initiative (""For responsible companies - for the protection of man and the environment"") will be published in the federal Gazette and the 100-day period for the optional referendum will begin. Once this period has expired, the Federal Council issues implementing regulations and determines the date of entry into force (amendments to the Swiss Code of Obligations and the Swiss Criminal Code).
The change in the law provides for new obligations for companies, which the Board of Directors must implement. The ESG reports must be approved and signed by the Board of Directors. A new provision is made for the violation of reporting obligations as an official offence. Anyone who makes false statements or fails to report and who does not comply with the legal storage and documentation obligations will be fined. The Board of Directors that does nothing risks being punished.
We recommend that the Board of Directors of all companies - regardless of their size - clarify the following questions as an immediate measure:
The first question the Board of Directors must ask itself is whether the company must prepare a report on so-called non-financial matters (ESG report). This includes the following ESG issues: Environmental concerns, social concerns, employee concerns, respect for human rights and combating corruption.
The relevant regulations (Art. 964bis CO) are complex and require careful clarification. In principle, it can be said that the transparency obligation applies to large companies (public companies and certain companies subject to FINMA; in two consecutive financial years at least 500 full-time positions and a balance sheet total greater than CHF 20 million or sales revenue of CHF 40 million). There are exemptions for Swiss subsidiaries that are controlled by a Swiss parent company, which itself reports on non-financial matters. Exempt are also Swiss subsidiaries whose foreign parent company must prepare an equivalent report under foreign law.
The legislator sets the bar high for the ESG report. The fulfilment of the reporting obligations requires diligent preparatory work and lead time that should not be underestimated. We recommend that the following points be addressed in a project:
Companies whose registered office, head office or principal place of business is located in Switzerland must comply with due diligence obligations in the supply chain and report on them when they release minerals or metals containing tin, tantalum, tungsten or gold from conflict and high-risk areas into free circulation in Switzerland or process them in Switzerland.
The Federal Council determines annual import quantities of minerals and metals up to which a company is exempted from the duty of care and reporting.
The Federal Council also lays down the conditions under which companies are exempted from care and reporting obligations if they comply with an internationally recognized equivalent set of rules, in particular the OECD Guidelines.
1. Reporting obligation
The board of directors must report annually on compliance with the due diligence obligations.
2. Due diligence
The following due diligence applies, although the Federal Council may issue more detailed regulations in this regard, which are based on internationally recognized rules, such as in particular the OECD guidelines:
Management system
The companies must maintain a management system and define the following:
Risk management
Obligation of examination by an independent expert
Companies whose registered office, head office or principal place of business is located in Switzerland must comply with duties of care in the supply chain and report on them if they offer products or services for which there is a well-founded suspicion that they were manufactured or provided using child labor.
The Federal Council determines the conditions under which small and medium-sized companies and companies with low risk in the area of child labor do not have to check whether there is a well-founded suspicion of child labor.
It also lays down the conditions under which companies are exempted from care and reporting obligations if they comply with an internationally recognized equivalent set of rules, in particular the OECD Guidelines.
1. Reporting obligation
The highest management or administrative body must report annually on compliance with the due diligence obligations.
2. Due diligence
The following duties of care apply, although the Federal Council may issue more detailed regulations in this regard, which are based on internationally recognized rules, such as in particular the OECD guidelines:
Management system
The companies maintain a management system and define the following
Risk management
Companies must identify and assess the risks of harmful effects in their supply chain. They must create a risk management plan and take measures to minimize the identified risks.
Anyone who deliberately omits to report or deliberately makes false statements in the reports, or deliberately fails to comply with the legal obligation to store and document the reports, will be fined up to CHF 100,000. Anyone acting negligently will be fined up to CHF 50,000.
MME is happy to assist you as a legal and compliance partner and supports you in fulfilling your responsibilities as a company. We have worked out a pragmatic standard package that we can efficiently adapt to your specific needs and risk profile. Our ESG, governance and compliance specialists will not only assist you with your paper work, but also with the introduction and further development of the topic of ESC and CSR within your business processes.