The New Federal Act on Sustainable Corporate Governance (NUFG): Overview for Businesses

The proposed legislation aims to align Swiss sustainability reporting and due diligence requirements with key EU frameworks—namely the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Its objective is to ensure that Swiss companies respect human rights and environmental standards while maintaining competitiveness domestically and internationally.

For Swiss companies active in international markets, the NUFG provides greater legal clarity, particularly as many large companies are already directly affected by EU sustainability regulations. The proposal seeks to avoid imposing additional burdens while ensuring regulatory alignment and protecting small and medium-sized enterprises (SMEs) from disproportionate impacts.

A key new provision is the obligation for in-scope companies to subject their sustainability reports to limited assurance by an external auditor. In addition, information requests from large companies to SMEs must not exceed the scope defined by the Voluntary Sustainability Reporting Standard for SMEs (VSME) for sustainability reporting purposes.

Scope of the NUFG

The draft NUFG addresses five core areas:

1. Obligation to report on sustainability
2. Due diligence obligations on human rights and environmental impacts
3. Existing due diligence requirements (conflict minerals and child labour)
4. Corporate liability
5. State supervision and enforcement

1. Obligation to report on sustainability

The draft NUFG introduces sustainability reporting obligations for:

• Swiss companies and groups/corporations with more than 1,000 employees and global turnover exceeding CHF 450 million over the preceding two financial years
• Non-Swiss companies with a Swiss branch or subsidiary generating more than CHF 450 million in turnover in Switzerland

Only large companies are directly in scope of reporting requirements. Smaller companies which were previously obliged to report on sustainability under Art. 964b of the Swiss Code of Obligations (CO) due to their stock market listing will be exempt from reporting in future.

Companies subject to reporting requirements must have their sustainability report audited with limited assurance by an independent audit firm. SMEs are not directly subject to reporting requirements but may be indirectly affected by data requests from large business partners. To limit this, the E-NUFG restricts such requests to the scope of the Voluntary sustainability reporting standard for SMEs VSME standard.

2. Due diligence on human rights and environment

The extended due diligence obligations, based on internationally recognised standards for the protection of human rights and the environment, apply to:

• Swiss companies and corporates/groups with more than 5,000 employees and global turnover exceeding CHF 1.5 billion
• Swiss companies and corporate/groups generating more than CHF 75 million in licence or franchise revenue and over CHF 275 million in global sales with independent third parties, where such arrangements involve a shared identity, business concept, and uniform operating practices.
• Non-Swiss companies generating more than CHF 1.5 billion in turnover in Switzerland
• Non-Swiss companies generating more than CHF 75 million in licence or franchise revenue and over CHF 275 million in Switzerland with independent third parties, where such arrangements involve a shared identity, business concept, and uniform operating practices.

The Federal Council estimates that around 30 Swiss companies will be affected.These companies must identify, prevent and mitigate adverse impacts on human rights and the environment throughout their value chains. The Federal Council will issue the detailed provisions by way of an ordinance. In doing so, it will draw on relevant, internationally recognised frameworks, such as the OECD Guidelines for Multinational Enterprises, the OECD Due Diligence Guidance for Responsible Business Conduct, and relevant EU directives (CSDDD).

Foreign companies subject to reporting or due diligence obligations must also appoint a representative in Switzerland to cooperate with the supervisory authorities.

3. Existing due diligence requirements

The draft NUFG incorporates existing due diligence obligations under Article 964 j-l of the Swiss Code of Obligations without modifying their scope:

• Conflict minerals: Applies to companies importing tin, tantalum, tungsten, or gold exceeding defined thresholds
• Child labour: Applies to all non-SME companies (fulfilling 2 of 3 criteria: more than 250 employees, balance sheet total more than CHF 20 million and Turnover more than CHF 40 million), with exemptions for businesses deemed to present low risk of child labor in their products and services

Failure to comply can result in fines of up to CHF 100,000.

4. Liability Framework

For companies, the existing liability provisions under the Swiss Code of Obligations apply. Accordingly, all provisions of the Swiss Code of Obligations continue to apply with regard to liability, provided the relevant conditions are met, such as the liability of corporate bodies under Article 722 of the Swiss Code of Obligations. This covers cases in which the company or group of companies is liable for its own conduct in Switzerland.

In addition, the draft NUFG provides for strict liability as a ‘lex specialis’:

In future, companies will also be liable for damage caused abroad, provided they intentionally or negligently breach the due diligence obligations laid down in the Act. The due diligence obligations relate to the companies’ own activities as well as those of their controlled entities. However, companies cannot be held liable for the harmful conduct of business partners.

As an alternative, the Federal Council proposes a less far-reaching liability regime. Unlike the main proposal, this alternative omits the special provision on “liability for breach of due diligence” where the damage was caused abroad.

The provisions include an absolute limitation period of 20 years.

5. State Supervision and Enforcement

The Federal Audit and Sustainability Supervisory Authority (RAB) is responsible for overseeing compliance with the provisions of the draft NUFG.

Its tasks include:

• Collecting sustainability and due diligence reports in electronic form
• Maintaining a public online register of submitted reports
• Checking compliance with the formal requirements of reports on the fulfilment of due diligence obligations and sustainability reporting
• Conducting risk-based assessments of compliance with due diligence obligations regarding human rights and the environment
• Imposing administrative measures, including fines of up to 3% of global net turnover for serious breaches, and publishing sanctions

Timeline and outlook

The consultation period for the law runs until 9 July 2026. Following the parliamentary debate, it is due to be put to a vote as a counter-proposal to the Corporate Responsibility Initiative 2.0 – likely in 2027, or at the latest in early 2028. Once it comes into force, a transitional period of around two years is envisaged, which is why the first implementation of the NUFG is not expected before 2029.

However, it is to be expected that a large number of companies falling within the scope of the draft NUFG will already be subject to comparable EU regulations from 2028 (CSRD) or 2029 (CSDDD) onwards.

How BDO Switzerland can support you

Sustainability reporting for large companies

• Guidance on selecting appropriate reporting standards aligned with Swiss and EU requirements based on existing reporting practice
• Carrying out materiality analysis process in accordance with the chosen reporting Standard
• Gap analysis of existing reporting processes, data points and governance
• Support in establishing robust reporting processes to ensure audit readiness including audit proof documentation
• Audit and assurance services for individual key performance indicators or complete sustainability reports
• Audit Readiness Check: Ensuring that future sustainability reporting meets similar requirements for traceability, quality and consistency as financial reporting

Sustainability Reporting for SMEs

• Assistance in preparing VSME-compliant reports to meet business partner data requests
• Provision of templates and tools to ensure all VSME datapoints are covered
• Support in interpreting and calculating required data points
• Efficient data collection frameworks to minimise resources used and costs

Due Diligence

• Clarification of the requirements under current Swiss law (Art. 964 of the Swiss Code of Obligations)
• GAP analysis to ensure compliance with future requirements
• Industry-specific templates and tools for a pragmatic and risk-based due diligence process
• Provision of templates for supplier onboarding and ensuring compliance
• Practical support in implementing due diligence processes relating to human rights and the environment