Comprehensive legal due diligence obligations in the areas of human rights and the environment strengthen the competitiveness of Swiss companies. The due diligence obligations should be compatible with European rules in order to achieve the necessary legal certainty. In a statement published today, Ethos, together with other domestic and foreign institutional investors, calls on the Swiss Parliament and the Federal Council to develop the existing regulation further and to advance the adjustments.
The European Commission recently published its project to simplify corporate due diligence obligations for the European Union (Omnibus). Regardless of the outcome of this ongoing reform, there is a large gap between the current provisions in Switzerland and those of the European Union. In the past, the Federal Council declared its intention to adopt an internationally coordinated approach in line with developments in the European Union. Ethos, together with an international group of 22 institutional investors with assets under management totalling CHF 512 billion, is therefore calling on the Federal Council and Parliament to strengthen human rights and environmental due diligence obligations for Swiss companies.
Institutional investors have the fiduciary duty to consider the environmental, social and corporate governance risks of companies in their investment decisions. Reputational damage and operational difficulties due to human rights violations and environmental pollution in supply chains can have a significant negative financial impact on companies and thus on investors' investments. Therefore, human rights and environmental due diligence is beneficial for companies, investors and the economy. Sensible regulation in this area makes companies' risk management processes more robust, creates transparency and resilience and enables investors to make better investment decisions.
In the past, Switzerland did not want to position itself as a pioneer. Today, however, it is isolated due to the lack of regulation. Switzerland also needs risk-based due diligence requirements for companies that are compatible with future EU regulations. This will ensure that the competitive conditions with the most important trading partners are harmonised. Otherwise, listed companies in Switzerland will become less attractive to international investors, who will increasingly expect these companies to comply with the highest human rights and environmental standards in future.
Ethos and the investor group call for the legislation on due diligence obligations to take into account international standards such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. Due diligence obligations should cover all sectors and the entire value chain, be risk-based and be subject to ongoing compliance and review. Finally, sanctions for non-compliance and civil liability are to be stipulated.
For its part, the European Commission wants to simplify and consolidate the requirements in the area of sustainability and corporate responsibility (Omnibus). This was in response to recent criticism regarding excessive bureaucracy and loss of competitiveness for European companies. A group of institutional investors, including Ethos, supports the overarching goal of simplifying EU sustainability regulation. However, they fear that the revision of the regulation will lead to legal uncertainty and jeopardise already agreed ambitions. Against this backdrop, the investors have issued a joint statement on 4 February 2025 calling on the European Commission to safeguard the objectives and coherence of EU sustainability regulation.
