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ESG Regulatory Update – Autumn edition 2023

Recent developments and upcoming changes in Swiss and international sustainability-related regulations impacting the financial services sector.

Download ESG Regulatory Update – Autumn edition 2023


In brief

  • The regulatory tsunami in the field of sustainable finance is keeping its momentum.
  • During the past semester, the corresponding initiatives continue to revolve around greenwashing mitigation.
  • Sound ESG reporting and sustainability due diligence throughout the value chains are further topics worth mentioning.

Our current ESG Regulatory Update provides an overview of recent – March to October 2023 – Swiss as well as European and international sustainability-related developments. Furthermore, this publication offers an outlook on select sustainability-related developments from November 2023 onwards.

Recently, we have observed the entry-into-force of several self-regulatory initiatives on the Swiss market: AMAS’ Self-regulation on transparency and disclosure for collective assets referring to sustainability as well as SSPA’s self-regulation on sustainability transparency.  Moreover, AMAS and SSF launched the “Swiss Stewardship Code”, SSF published a guide on climate reporting for financial services providers and SBA complemented its brochure “Risks Involved in Trading Financial Instruments” regarding ESG risks, just to name a few further initiatives in this regard.

In the current Swiss regulatory pipeline, the Ordinance on Climate Disclosures (TCFD reporting) is entering into force on 1 January 2024. The Ordinance establishes a climate disclosure obligation for companies in scope: In alignment with the TCFD recommendations, companies must disclose the financial risks resulting from climate-related activities and the impact that their business activities have on the climate in their reports.

On 18 June 2023, the Swiss electorate voted on the Federal Act on Climate Protection Targets, Innovation and Strengthening Energy Security (the Climate Innovation Act as an indirect counter-proposal to the Glacier Initiative). In line with the commitments with the Paris Agreement to reduce greenhouse gas emissions, the Climate Innovation Act aims to make Switzerland less dependent on energy imports while strengthening climate protection. The Climate Innovation Act is expected to enter into force on 1 January 2025.

Moreover, the Swiss Federal Council has announced its intention to possibly pass implementational provisions regarding non-financial reporting, responsible business conduct and greenwashing prevention. Among other things, the threshold for the obligation to report on non-financial matters is to be lowered from 500 to 250 employees. The Federal Council is expected to adopt the corresponding consultation draft in mid-2024. In the area of supply chain due diligence, the Federal Council is currently analysing the effects of the planned EU CS3D on Swiss companies. The analysis is expected to be available by the end of 2023.On an EU level, the European Commission finally adopted the first set of ESRS. The Standards cover the full range of environmental, social, and governance issues, including climate change, biodiversity, and human rights and are mandatory for all companies obliged to report certain sustainability information under CSRD.

 

Furthermore, the European Parliament adopted amendments of the CS3D proposal. The amendments foresee i.a. that also activities along the value chain (sellers, suppliers, distributors, and transporters) are considered in the due diligence obligation. The trilogue negotiations on the CS3D proposal are still ongoing.

 

Internationally, the adoption of the final TNFD recommendations is also worth mentioning. The recommendations for nature-related risk management and disclosure aim to improve the decision making by companies and capital providers to ultimately contribute to a shift in global financial flows toward nature-positive outcomes and goals of the Kunming-Montreal Global Biodiversity Framework.

 

Our ESG specialists support companies in the financial services sector throughout their sustainability journey – be it for the purpose of avoiding greenwashing, ensuring regulatory compliant ESG reporting or adherence to supply chain due diligence requirements.

ESG Regulatory Update – Autumn edition 2023

Please find below an overview of recent Swiss, European, and international sustainability-related regulatory developments.


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Summary

Sustainability has found its way into the rulebook of the financial market. The myriad of new regulation and amendments to existing regulation in the field of sustainable finance is rather overwhelming. EY’s ESG Regulatory Update helps you stay on top of regulatory developments in the field of sustainable finance.

Acknowledgement

We would like to thank Tatiana Kovalenko, Rebecca A Slade, Alma Veuthey, Ana Carolina Brönnimann, Onerva Härmä and Samira Bettinelli for their relentless support and valuable contributions in the field of ESG.

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