Overview

In 2025, ESG topics faced a notable backlash, particularly in the United States and the European Union, leading to a recalibration of sustainability-related regulatory agendas. The EU, in particular, slowed or scaled back several components of its ESG framework, a shift that has direct implications for the Swiss legal landscape and Swiss companies operating across borders.

On 26 February 2025, the European Commission introduced the Omnibus 1 package, aimed at streamlining the EU’s sustainability framework and resolving overlaps in reporting and due diligence requirements. This package comprises two key components:

• The “stop-the-clock” proposal – this initiative adjusts the phase-in timelines for obligations under the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy Regulation. The directive officially came into force on 17 April 2025, granting companies additional time to comply with these complex requirements.
• The “content” proposal – this component revises the scope and substantive provisions of the CSRD, CSDDD and EU Taxonomy. On 23 June 2025, the Council of the European Union adopted its final position on the proposal, which is currently under review and negotiation by the European Parliament.

In response to these developments, the Swiss Federal Council has suspended ongoing legislative amendments relating to ESG reporting obligations, in order to align with the EU’s evolving framework. This strategic pause reflects Switzerland’s recognition of the broader recalibration currently taking place within the EU.

Even though certain initiatives have been temporarily put “on hold” pending further clarity from the EU, the Swiss ESG framework is still evolving. Several key legislative instruments came into force in Switzerland on 1 January 2025:

• the Act on Climate Protection Targets, Innovation and Strengthening Energy Security (the“Climate and Innovation Act”) and its corresponding ordinance of 27 November 2024;
• amendments to the CO₂ Act; and
• a new provision in the Unfair Competition Act (Article 3 paragraph 1 letter x of the UCA ), specifically targeting climate claims.

Additionally, on 17 December 2024, the Swiss Financial Market Supervisory Authority (FINMA) published the circular “Nature-related financial risks” (Circular 2026/1), which outlines expectations for banks and insurers to identify, assess and manage climate- and nature-related financial risks. Implementation will begin in stages, starting 1 January 2026.

Climate and Innovation Act, Net-Zero Target and Roadmaps for Companies

Switzerland is a party to the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol, and the Paris Agreement. Switzerland’s international obligations under these treaties are implemented at the national level in various laws, mainly through the CO₂ Act and the Climate and Innovation Act.

The Climate and Innovation Act, which came into force on 1 January 2025, formally anchors the goal of achieving net-zero emissions by 2050 in Swiss legislation for the first time. It also sets out intermediate targets for key sectors, such as the building, transport and industry sectors, to ensure steady progress towards this goal.

All companies are expected to reduce their emissions to net zero by 2050 at the latest. The Confederation and the cantons must lead by example in achieving the net-zero target and adapting to the effects of climate change. The central federal administration must reach net-zero emissions by 2040. The law also establishes sector-specific reduction pathways to support this transition.

To achieve net zero, GHG emissions must be reduced as much as possible, with any remaining emissions being offset through negative-emission technologies. These technologies involve biological and technical processes that remove CO₂ from the atmosphere and store it permanently in forests, soils, wood products or other carbon sinks.

By 2050 at the latest, the Confederation and the cantons must ensure that sufficient carbon sinks are available in Switzerland and abroad to meet the net-zero target. Switzerland was the first country to sign a bilateral agreement under Article 6.2 of the Paris Agreement, enabling international co-operation through the exchange of carbon credits known as Internationally Transferred Mitigation Outcomes (ITMOs).

The Climate and Innovation Act encourages companies to develop voluntary decarbonisation roadmaps as part of their efforts to achieve net-zero emissions. While these roadmaps are not mandatory, they are required for companies seeking federal financial support for innovative technologies and processes. A typical roadmap includes a carbon footprint assessment, a reduction target and a concrete action plan.

The act also contains provisions for climate change adaptation, and aims to align financial flows with climate objectives.

For the period from 2025 to 2030, the implementation of emission reduction targets is governed by the revised CO₂ Act and the revised CO₂ Ordinance.

Interdiction of unfair climate claims (Article 3 paragraph 1 letter x in the Unfair Competition Act)

As part of the post-2024 revision of the CO₂ Act, parliament amended the Unfair Competition Act (“LCD/UWG”) by adding a new provision. It is now considered unfair to make climate-related claims about products, services or companies without objective, verifiable evidence to substantiate them. At the same time, the CO₂ Act was amended to enable the Federal Office for the Environment (FOEN) to establish standards and methodologies for evaluating the climate impact of companies and products. These provisions came into force on 1 January 2025. Climate-related claims must be clear, truthful and evidence-based. The FOEN is preparing an implementation guide to clarify key terms related to climate claims, such as “CO₂-neutral” or “climate-neutral”, and to outline the criteria by which their accuracy will be verified.

The prohibition of climate-washing applies to all corporate communications, and information published in non-financial reports and advertisements. Non-compliance may result in civil or criminal penalties as set out in the Unfair Competition Act.

Sustainability Disclosure Requirements

Swiss companies are subject to a number of ESG reporting obligations that have gradually become more stringent in recent years.

Under Articles 964a et seq of the Swiss Code of Obligations (CO), large companies (ie, public companies, banks and insurance companies with at least 500 employees and either CHF20 million in total assets or CHF40 million in turnover) must publish an annual non-financial report covering:

• environmental matters, including a transition plan;
• social and employee-related issues;
• human rights; and
• anti-corruption efforts.

Furthermore, companies operating in sectors sensitive to child labour, or sourcing minerals and metals from conflict zones, must comply with specific due diligence and transparency obligations, including risk assessments and reporting.

The wilful provision of false information in reports, according to Articles 964a, 964b and 964l of the CO; wilful failure to establish the required reports; and failure to comply with the statutory obligation to retain and document the reports are subject to criminal prosecution, with a fine of up to CHF100,000. In the event of negligence, a fine of up to CHF50,000 can be imposed (Article 325ter of the Swiss Criminal Code or SCC).

In 2024, the Federal Council launched a consultation on amending Article 964a et seq CO. The aim was to increase the obligations imposed on companies regarding sustainability disclosure requirements, thereby aligning Swiss law with the CSRD and CSDDD.

Key proposed amendments to the CO include the following: 

• Disclosure obligations would extend to companies with at least 250 employees (rather than 500, under current legislation). Additionally, companies would only need to meet two out of three criteria (number of employees, turnover, balance-sheet total) for two consecutive years to fall within the scope.
• Companies would be required to report based on the principle of double materiality.
• The draft amendment would allow companies to report in accordance with the European Sustainability Reporting Standards (ESRS) or other standards deemed equivalent by the Federal Council, such as the International Financial Reporting Standards (IFRS) on sustainability disclosure and the Global Reporting Initiative (GRI) Standards.
• Sustainability information would have to be assessed by an auditor or an accredited conformity assessment body, in line with the requirements provided under European law.
• The “comply or explain” principle would be abolished.

Responses to the consultation revealed mixed views, with many stakeholders calling for simplified administrative processes. In March 2025, the Federal Council instructed the Federal Department of Justice and Police (EJPD) to draft pragmatic amendments to the current legislation. The aim of these changes is to ensure that Swiss companies uphold human rights and environmental standards while remaining competitive in Switzerland and internationally.

The Federal Council will decide on the next steps once the EU has finalised its proposed simplifications, or by spring 2026 at the latest.

Climate Reporting Ordinance

The Climate Reporting Ordinance, which came into force on 1 January 2024, sets out the requirements for climate-related disclosures by companies that are subject to Article 964a CO. These disclosures are an integral part of the environmental aspects covered by the non-financial reporting obligations set out in Article 964b CO. The ordinance is based on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) of June 2017.

Climate-related matters include both the impact of climate change on companies and the impact of companies’ activities on the climate. Implementation of the recommendations includes, in particular, the preparation of a transition plan aligned with Switzerland’s climate targets.

In January 2024, the Federal Council decided to revise the ordinance to take into account international developments, particularly by aligning it with the latest ESRS and ISSB (International Sustainability Standards Board)  standards while adhering to the principle of proportionality. This will give companies that must apply the ESRS, due to its extraterritorial effect, legal certainty that they will also fulfil Swiss requirements. Other companies may use the more pragmatic ISSB standard as an alternative.

The revision also aims to align terminology with that of the Climate Protection Ordinance, as well as including minimum requirements for financial institutions’ transition plans.

The majority of participants in the consultation process welcomed the content of the draft revision. However, many also requested that it should not be implemented until the Federal Council had made a decision on the current revision of the higher-level provisions of the CO relating to sustainability reports. At its meeting on 25 June 2025, the Federal Council decided to temporarily suspend the revision of the Climate Reporting Ordinance until a decision had been made on the CO amendment or, failing that, until 1 January 2027 at the latest.

The Swiss legislative process is therefore on hold, pending final developments within the EU, particularly the Omnibus 1 package. To maintain competitiveness and ensure legal alignment with international standards, Switzerland intends to adapt its framework once the European rules are finalised, while avoiding premature regulatory divergence.

Trends in Sustainable Finance

Alignment with the net-zero target

Article 9 of the Climate and Innovation Act calls on the financial sector to contribute to climate goals by making financial flows compatible with the net-zero target. Implementation is currently based on a voluntary approach, supported by recommendations from the Federal Council. The Climate Protection Ordinance requires the Confederation to regularly assess the climate compatibility of investments in the Swiss financial market and evaluate the efforts of financial institutions.

The Swiss Climate Scores, launched in 2022, make up a voluntary framework that enables financial institutions in Switzerland to report on the climate compatibility of their investments. Using a set of standardised indicators, the scores provide investors with transparent, comparable information on how investments align with the Paris Agreement and the goal of achieving net-zero emissions by 2050.

Furthermore, every two years, the FOEN and the State Secretariat for International Financial Matters (SIF) carry out the Climate Test using the internationally recognised PACTA ((Paris Agreement Capital Transition Assessment) method. The aim is to determine the progress being made by the Swiss financial market towards achieving climate protection targets. The PACTA Climate Test assists the financial sector in working towards the binding net-zero target by 2050. The results of the 2024 test reveal that the majority of financial institutions have already incorporated the net-zero target into their internal corporate strategy. However, many of the measures taken by financial institutions are not yet consistent with this target.

Climate- and nature-related risks

In addition to the disclosure requirements imposed on large banks and insurance companies by Article 964a CO, banks and insurers subject to supervision by FINMA are required by prudential regulations to disclose specific information on climate-related financial risks.

Since 2021, FINMA has required large banks and insurance companies to systematically disclose climate-related financial risks. Furthermore, FINMA has published a new “Nature-related financial risks” circular, which will come into effect in stages from 1 January 2026. The circular, which applies to banks and insurers, clarifies FINMA’s supervisory practice with regard to the management of climate- and other nature-related financial risks.

In the circular, FINMA communicates its expectations of banks and insurers regarding the management of these risks. The circular aims to strengthen the resilience of supervised institutions to these risks, thereby protecting their clients and the Swiss financial centre. FINMA takes a broad approach to the covered risks, encompassing not only climate change, but also other potentially relevant nature risks. FINMA is guided by international frameworks and standards, applying the principle of proportionality to set higher expectations for larger, more complex institutions.

This circular explicitly requires the integration of nature-related risks into governance processes and structures. FINMA refers to these nature-related risks as “risk drivers” that affect traditional risk categories, including credit risks, market risks, liquidity risks, operational risks, and reputational risks.

Banks and insurance companies must integrate nature-related financial risks into their governance and risk management frameworks. This includes clearly defining responsibilities at board and management levels and ensuring that decision-makers have the necessary expertise.

They are expected to identify nature-related risks and assess their financial relevance. The process and findings must be documented.

If these risks are deemed material, they must be incorporated into the institution’s overall risk management and internal control systems, considering the long-term nature of such risks.

Larger banks (categories 1 and 2) must gradually include these risks in their stress-testing and capital-adequacy assessments. Insurers must reflect them in their Own Risk and Solvency Assessments (ORSAs).

Self-regulation

The regulatory approach to sustainable finance is based on principles such as the primacy of market-based solutions and the subsidiarity of government action. However, due to the growing demand for ESG investments and transparency, coupled with developments in the EU, specific rules are becoming increasingly necessary. In 2022, the Swiss Federal Council published its position on the prevention of greenwashing in the financial sector and outlined the key points that it expected the financial sector to implement through self-regulation.

On this basis, the Asset Management Association Switzerland (AMAS), the Swiss Bankers Association (SBA) and the Swiss Insurance Association (SIA) adopted self-regulatory provisions to establish, among other things, uniform standards for labelling sustainable investment products. These self-regulations establish binding rules for the members of the respective organisations. While AMAS and SBA provisions came into force in 2024, the SIA provisions only came into force on 1 January 2025, with a transitional period up to 1 January 2027 in some areas.

The three self-regulations are designed to have consistent core definitions and principles, particularly regarding “sustainability” (alignment/contribution), transparency, accountability, and external assurance. However, certain open questions remain unanswered, such as how Swiss self-regulation will align or adapt in response to evolving EU regulation (particularly revisions to the EU Sustainable Finance Disclosure Regulation or SFDR).

The Federal Council has instructed the Federal Department of Finance (FDF) to re-evaluate the need for action, once the EU publishes amendments to the SFDR, or by the end of 2027 at the latest.

ESG Litigation and Enforcement

ESG litigation is expected to rise in Switzerland as regulatory expectations grow and public awareness of corporate responsibility intensifies. Two landmark cases illustrate this trend.

Association KlimaSeniorinnen Schweiz v Switzerland

On 9 April 2024, the Grand Chamber of the European Court of Human Rights (ECtHR) delivered its first-ever judgment on climate change, ruling in favour of the Swiss association KlimaSeniorinnen Schweiz. The court found that climate change can interfere with rights protected by the European Convention on Human Rights, particularly the right to respect for private and family life (Article 8), and potentially the right to life (Article 2). It concluded that Switzerland had violated Article 8 by failing to take sufficient measures to address climate change.

The KlimaSeniorinnen v Switzerland judgment by the ECtHR clarified important points about the right of associations to bring climate-related cases.

The court rejected the individual complaints of the four women involved, finding that they did not meet the criteria to be considered direct victims under Article 34 of the European Convention on Human Rights. However, it accepted the standing of the association KlimaSeniorinnen Schweiz. The court found that the association could represent the interests of a group particularly affected by climate change, especially older women, and that it had a legitimate interest in bringing the case.

This is significant because it confirms that associations can, under certain circumstances, bring cases before the court on behalf of affected groups, even if individual members do not meet the strict admissibility criteria. The court also found that the Swiss courts had not given the association a fair opportunity to have its case heard, which constituted a violation of the right of access to a court under Article 6 § 1 of the European Convention on Human Rights.

On 28 August 2024, the Swiss Federal Council stated that it considered Switzerland to be in compliance with the ruling. It referred to the revised CO₂ Act of 15 March 2024, which sets out measures to meet the country’s 2030 climate targets. However, the ECtHR had not taken this revision into account in its judgment, nor the new Federal Act on a Secure Electricity Supply from Renewable Energy Sources, adopted on 9 June 2024. In October 2024, Switzerland submitted an action report to the Council of Europe, asserting that it had taken appropriate steps to comply with the judgment.

In March 2025, the Committee of Ministers of the Council of Europe, which monitors the implementation of ECtHR judgments, concluded that Switzerland had not yet complied with the KlimaSeniorinnen ruling. It stressed the need for Switzerland to adopt a quantified framework – such as a carbon budget or a similar mechanism – for reducing GHG emissions. While acknowledging some legislative progress, the committee requested further information demonstrating how Swiss climate policy aligns with the court’s reasoning, particularly regarding national emissions limits.

In September 2025, the committee reaffirmed that Switzerland had not yet effectively implemented the judgment. It welcomed the adoption of a comprehensive legal and regulatory framework at the federal level, along with relevant measures at the cantonal level, but found these efforts insufficient. The committee invited Switzerland to consider establishing an independent national body, adapted to its political system, to monitor climate policy and provide recommendations to political authorities. It also reiterated its request for updates on domestic case law, particularly regarding the standing of associations in climate litigation and how courts assess the substance of such cases.

Asmania et al v Holcim

In July 2022, four residents of Pari Island in Indonesia sued the Swiss cement company Holcim, which is based in Zug, Switzerland. They requested proportional compensation for climate-induced damage, as well as a contribution towards climate change adaptation measures on Pari Island. The plaintiffs also requested that Holcim reduce its CO₂ emissions by 43% by 2030 and by 69% by 2040. This legal action is based on Articles 28 et seq of the SCC (violation of personality rights) and Articles 41 and 49 of the CO (tort). This is the first climate change lawsuit of its kind to be filed against a major carbon emitter in Switzerland, following similar lawsuits against companies such as RWE in Germany and Royal Dutch Shell in the Netherlands, UK and Canada.

A hearing took place at the Zug cantonal court in September 2025 and the court is deliberating on whether the case is admissible to proceed to a full hearing on its merits. The decision is expected at a later stage.