Following in the footsteps of the UK, Switzerland recently made it mandatory to report on climate-related financial risk. But what does that mean for Swiss companies? It’s another one to add to the growing list of countries cracking down on climate risk. We get the full details from Dr. Laura Mazzola, SASB FSA Credential Holder and Climate Risk Analyst at Cervest. In this blog, Laura talks about the required reporting from her perspective and what we know so far.
The new Swiss mandatory climate disclosures
Last week, one more country passed new legislation and made it mandatory for big Swiss companies and financial institutions to disclose information on climate-related risks and strategies. The Swiss Federal Council passed the legislation under the Ordinance on Climate Disclosures.
Public companies and financial institutions will have reporting requirements following the Task Force on Climate-related Financial Disclosures (TCFD). This will be law for companies with 500 plus employees, assets worth CHF 20 million or more, or that have a revenue of CHF 40 million or over.
As with the UK Climate Disclosures Law, also enacted this year, the legislation aligns with the four pillars of recommendations from the TCFD. However, compared to its British counterpart, the Swiss regulation goes further. It not only refers to the 11 recommendations but also asks companies to take “Guidance on Metrics, Targets, and Transition Plans” into account. Plus it requires them to publish a transition plan comparable with Swiss climate goals including GHG emissions and CO2 targets, quantitative information, and the main assumptions, methods, and standards used.
When will companies have to comply with the Swiss climate disclosure law?
To comply with the law, organizations must include climate disclosures in their report on non-financial matters as per Articles 964a–964c under the Swiss Code of Obligations. Enforcement of the law begins in January 2024, with the first reports in 2025, one year later than initially announced.
The general framework
Roadmaps and announcements on how this will be rolled out aren’t available yet, but it’s possible to look at the Ordinance and Swiss Code of Obligations for a general framework. It's clear though that organizations need a reporting tool that will help them reach full compliance.
The Ordinance refers directly to the Task Force on Climate-related Financial Disclosures (TCFD) and explicitly mentions its pillars. However, we expect the Swiss Federation to publish guidance on how to disclose information in the upcoming months, in the same way the UK published its non-binding guidance.
Having a standardized, science-backed climate intelligence (CI) partner has never been more crucial – organizations will need to access granular, interpretable and actionable insights in order to compile comprehensive reports on climate risk across their assets, supply chains and operations. Switzerland joining the growing list of countries making climate disclosures mandatory is a positive step towards building climate resilience. But companies will need help with creating an efficient, uniform and streamlined process for climate reporting.
Need help with mandatory climate-related financial risk reporting?
Businesses can gather CI in a range of ways, both human and technology generated, but not all approaches will be standardized or deliver decision-useful information. Cervest’s climate intelligence product, EarthScan™, enables organizations to screen thousands of assets for physical climate-related risk, and report on the greatest risks and opportunities on-demand.
For the first time, customers can analyze, rate, and report assets on their physical climate risk, share directly with stakeholders, clients, investors, and other shareholders, and meet fast-changing reporting regulations with report-ready, science-backed insights and automated climate risk reports.
EarthScan equips businesses, governments, and NGOs with the CI they need to make confident, informed decisions that enhance the resilience of their assets. It creates the most comprehensive picture possible of climate-related risk.
To get ahead with your mandatory climate-related financial risk reporting, download our free ebook.
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