Switzerland's New Corporate Sustainability Framework: What to Expect

On 1 April 2026, the Swiss Federal Council unveiled a preliminary draft to overhaul Swiss sustainability reporting and supply chain due diligence rules: a new Sustainable Business Conduct Act.

The preliminary draft SBCA constitutes the Federal Council's indirect counterproposal to the second Responsible Business Initiative. The first such initiative was narrowly rejected in 2020 but gave rise to the current Swiss Code of Obligations ("CO") requirements on non-financial reporting and conflict minerals and child labor due diligence and transparency, in force since 1 January 2022.

The SBCA has been deliberately timed and calibrated with reference to EU developments, notably the adoption of the Omnibus Directive. In September 2025, the Federal Council committed to preparing a consultation draft aligned with (but not exceeding) the simplified EU framework. True to that commitment, the proposed SBCA closely follows the post-Omnibus thresholds and value chain architecture, while adding distinctly Swiss features, most notably a civil liability regime proposal for foreign supply chain harm and the integration of existing conflict minerals and child labor obligations.

The consultation period runs until July 2026. The Federal Council has until 27 November 2026 to submit the draft statute and accompanying dispatch to the Swiss Parliament. Once the parliamentary process is under way, the timeline for practical application will depend on the pace of parliamentary proceedings and a possible referendum.

Scope

Under the existing rules, the obligation to prepare and publish a sustainability report applies to Swiss public interest companies with 500 FTE or more and either CHF 40 million in net turnover or CHF 20 million in balance sheet total. The SBCA replaces this with a single, higher combined FTE and turnover threshold, applicable to all enterprises irrespective of whether they are public interest entities or privately held. In practice, this means that large private enterprises currently outside the scope of the rules may become subject to mandatory sustainability reporting for the first time and smaller public interest companies will fall outside. The new thresholds are aligned with those of the post-Omnibus CSRD.

The Federal Council estimates that approximately 110 Swiss enterprises would fall within the reporting obligation (compared to approximately 200 currently), with the majority of those in scope already falling under the EU third-country regime.

The proposed scoping rules can be summarized as follows:

The SBCA's most significant amendment is the introduction of mandatory risk-based human rights and environmental supply chain due diligence obligations for very large enterprises, a requirement with no equivalent in current Swiss law beyond the narrow conflict minerals and child labor thematic.

Scope

In line with the post-Omnibus CSDDD, the SBCA proposes to subject to supply chain due diligence obligations:

• Swiss enterprises exceeding (with controlled entities over two consecutive financial years):
  • 5'000 FTE and CHF 1.5 billion in worldwide net turnover; or
  • CHF 75 million in royalties and CHF 275 million in worldwide net turnover under franchising or licensing agreements ensuring a common identity and uniform business methods.
• Third-country enterprises exceeding (with controlled entities in the last financial year) CHF 1.5 billion in Swiss market turnover (or the equivalent franchising/licensing thresholds).

Enterprises complying with an internationally recognized equivalent framework (most relevantly, the CSDDD) would be exempted from the SBCA's specific implementation requirements.

The Federal Council estimates that approximately 30 Swiss enterprises would be subject to the due diligence obligation, most of whom already fall under the EU third-country regime.

Core obligations and chain of activities

The SBCA requires enterprises to identify, assess and address actual and potential adverse human rights and environmental impacts arising from their own operations, those of their controlled entities, and those of their business partners across their chain of activities – covering upstream production and downstream distribution, transport and storage carried out on behalf of the enterprise. Concretely, enterprises must develop a due diligence strategy, take preventive and corrective action, operate a grievance mechanism and monitor effectiveness.

These obligations are structured around a risk-based approach: enterprises first conduct a scoping exercise to identify general areas of highest risk, then carry out an in-depth assessment in those areas. In practice, this concentrates scrutiny on direct suppliers, while preserving the ability to look further up the chain where risks warrant it. Consistent with the post-Omnibus CSDDD, information requests from business partners with fewer than 5'000 FTE are only permitted where the information cannot be obtained by other means.

Transparency

Compliance must be documented internally and reported on annually externally. The due diligence report is subject to limited assurance, though the supervisory authority may require reasonable assurance in individual cases. Enterprises also subject to the sustainability reporting obligation are exempt from the separate due diligence report, avoiding duplication.

The SBCA proposes the establishment of a dedicated federal supervisory authority, the Federal Supervisory Authority for Audit and Sustainability (the "Supervisory Authority").

The Supervisory Authority would maintain a public register of supervised enterprises, conduct risk-based compliance reviews and receive and investigate suspected violations. It would have broad enforcement powers, including the ability to issue warnings, enjoin non-compliant conduct, impose fines of up to 3% of worldwide net turnover (consistent with the post-Omnibus CSDDD penalty ceiling), confiscate profits, and publish its decisions. In cases of serious and repeated violations, it may also exclude enterprises from federal, cantonal and municipal public procurement for up to five years.

The SBCA integrates the existing Art. 964j et seq. CO obligations on conflict minerals and child labor. These specific due diligence and transparency rules would continue to apply to all Swiss enterprises that are captured by the current risk-based scoping rules. Notably, neither the SBCA's new Supervisory Authority and administrative enforcement tools nor the civil liability regime (see section 3 below) extend to these specific obligations.

The SBCA's liability provisions will almost certainly be the most debated aspect of the upcoming consultation process. The draft presents two alternatives which, while seeking to provide legal certainty, raise as many questions as they resolve.

• Alternative 1 (the main version) – The SBCA as lex specialis for damage caused abroad

Under Alternative 1, enterprises subject to the SBCA's due diligence obligations would be liable for damage caused abroad through intentional or negligent breach of those duties. The SBCA regime would operate as a lex specialis displacing general liability rules (Arts. 41 and 55 CO) for foreign damage, and expressly designating the due diligence duties as protective norms, including for the recoverability of pure economic loss. In group situations, this specific regime implies that a Swiss parent company could be held directly liable where its own failure to implement adequate due diligence in relation to a foreign subsidiary caused harm abroad (including where the parent did not have actual knowledge of the risk but should have identified it through a properly conducted due diligence process). The actionable wrong is always the enterprise's own deficient process.

This specific regime, however, would be limited to damage caused abroad. For domestic harm, general Swiss liability rules would continue to apply, leaving open the very question that the draft seeks to resolve for foreign damage.

• Alternative 2 – Deference to general CO liability rules

Alternative 2 takes a more conservative approach, applying existing general Swiss liability rules throughout without creating a new cause of action (but also without resolving the many open questions that arise when liability must be grounded in a breach of due diligence duties).

Both alternatives share a number of common features. They expressly exclude liability for the conduct of business partners. Both also provide for joint and several liability where multiple enterprises are independently held liable under the SBCA. This rule does not address, however, the prior and more complex question of how liability is established among multiple parties who may have contributed to the same harm, which the draft leaves open.

Evidence disclosure

The SBCA proposes a far-reaching discovery mechanism by which claimants would be allowed to request a defendant enterprise to produce evidence, provided they can render their claim and the necessity of the evidence plausible. This mechanism would complement existing procedural tools and introduce an approach the Omnibus I Directive ultimately abandoned at EU level, leaving room to EU Member States to legislate in this regard.

While the SBCA's entry into force remains some time away and much may still change through consultation and parliamentary deliberations, it seems clear that new obligations will be introduced, in particular for large companies.

Companies potentially in scope of the new rules should, therefore, start preparing and in particular address the following points:

• Assess your exposure. Determine whether your enterprise meets the reporting thresholds and/or the due diligence thresholds. Note that foreign-controlled Swiss subsidiaries and branches may also be caught by reporting requirements based on Swiss market turnover alone, and that third-country enterprises may be caught by supply chain due diligence requirements on the same basis.
• Prepare for ESRS-aligned reporting and begin aligning internal data collection and governance processes accordingly.
• Build your audit trail. Robust internal documentation and processes will be essential for both future audit requirements and supervisory scrutiny.
• Board readiness. Boards and their committees (audit, risk and/or sustainability) should begin scoping their oversight responsibilities in anticipation of the SBCA's strengthened board-level ownership requirements and the heightened compliance, legal and reputational exposure.
• Monitor the liability debate. The choice between alternatives 1 and 2 will determine the contours of a regime that is novel, untested and whose practical application in cross-border and group scenarios raises genuinely difficult questions. Where harm occurs abroad, the risk of foreign courts being called upon to apply Swiss law – including in scenarios involving Swiss parent companies and their foreign subsidiaries – makes it essential that the regime's scope and limits be clearly defined.

If your company is not directly in scope of the new rules:

• Prepare for significant trickle-down effect. Large enterprises' due diligence and reporting obligations will have a trickle-down effect across their supply chains. Be prepared to respond to information requests within the limits of the value chain cap. Familiarising yourself with the voluntary disclosure standards that the Federal Council is expected to designate is a practical first step.
• Assess continuing voluntary reporting. Companies that currently report under Art. 964a CO but would fall outside the SBCA's higher thresholds should consider whether and how to continue reporting, whether to meet supply chain data requests, satisfy investor or regulatory expectations, or simply because the discipline of external disclosure drives internal processes and risk management that are valuable in their own right.

If your company is in scope of the conflict minerals or child labor due diligence rules:

• Continue as before. The SBCA integrates the existing Art. 964j et seq. CO obligations largely unchanged. Existing compliance programmes and reporting requirements remain relevant and no fundamental overhaul is anticipated.

Please do not hesitate to contact us in case of any questions.  

Legal Note: The information contained in this Smart Insight newsletter is of a general nature and does not constitute legal advice.