The proposed revision of the provisions relating to transparency on sustainability issues in Switzerland has not gone unnoticed by the business community.
The project aimed at adapting the provisions of the Code of Obligations, relating to “transparency on non-financial issues”, aims to strengthen the responsibility of companies on social, environmental and governance issues. The planned changes include an increased obligation for companies to publish detailed reports on their environmental and social impacts. Inspired by the CSRD Directive1 of the European Union, this revision involves following strict reporting standards.
Critical voices in the business world are expressing legitimate concerns about additional costs and administrative burden, especially for mid-sized companies. Some also fear that the implementation of this project, without sufficient coordination at the international level, will affect the competitiveness of Swiss companies. If these criticisms are to be believed, the requirement for transparency expressed by the regulator would tend to have a “punitive” scope. In reality, the normative framework that the Swiss regulator intends to establish aims to facilitate the ecological and social transition. It does not “claim to govern the functioning of businesses” as specified in a study produced by Terra Nova2. It is above all part of a liberal approach. Its ambition is to enable the economic community to equip itself with a precise metric system allowing it to make decisions aimed at maximizing its overall performance in the long term. The concept of overall performance, often associated with the “triple bottom line” (“People, Planet, Profit”), refers to a fair evaluation of an organization's results, integrating economic, social and environmental aspects and linking them directly to economic performance. The notion of overall performance therefore implies the existence of a link between economic performance and environmental and social impact. However, the integration of this link into the business model of companies is new and is therefore not obvious. The accounting requirements to which companies are subject ignore this. This is not for lack of having been regularly alerted, in particular by certain industrialists like Henry Ford who, in his time, declared: “the two most important things do not appear on the balance sheet of the company: its reputation and his men.
The project to revise the provisions relating to transparency on sustainability issues in Switzerland and the European initiative on which it is inspired, proposes a holistic approach to establish the unbreakable link between financial and extra-financial issues. As the aforementioned Terra Nova study suggests, “so-called extra-financial data are drivers of financial phenomena”. In this way, the CSR reporting process is no longer intended to be a simple observation of good practices in force. On the contrary, it presents itself as a vector for prospective analysis. Its rigorous application is accompanied by the obtaining of a set of indicators allowing “(…) to increase visibility on the benefits obtained” and to “precisely reflect the specificities and DNA of the companies concerned”. Management bodies and members of the Board of Directors thus have an invaluable means of measuring the impacts, risks and opportunities induced by social and environmental factors. Thus, the effort required to exercise transparency in CSR reporting certainly generates costs, but the 200 Swiss companies which could be affected by the new provisions of the CO, like the 50,000 European companies subject to the CSRD (i.e. 0.2 % of companies in the European Union), in return, acquire a competitive advantage over their competitors: that of having a tool allowing them to manage, across their entire value chain, the material interactions between economic performance and social challenges and environmental. The ambition is to gradually shift the economic model from the era of “Shareholder value” to the era of “Stakeholder value” where taking into account the interests of shareholders is now inseparable from the interests of other stakeholders.
1 Corporate Sustainability Reporting Directive
2 CSRD: the metric system of responsible business
