The proposed review of the provisions related to transparency on sustainability issues in Switzerland has not been noticed by the business community.
The project aims to adapt the provisions of the Code of Obligations related to “transparency on non-financial issues”, strengthening the responsibility of companies regarding social, environmental and governance issues. The proposed changes include an increased obligation for companies to publish detailed reports on their environmental and social impacts. Inspired by the CSRD Guide1 of the European Union, this review is about following strict reporting standards.
Critical voices in the business world are expressing legitimate concerns about additional costs and administrative burden, especially for medium-sized companies. Some people also fear that the implementation of this project, without adequate coordination at the international level, will affect the competitiveness of Swiss companies. If these criticisms are to be believed, the transparency requirement expressed by the regulator would tend to have a “punitive” scope. In fact, the normative framework that the Swiss regulator intends to establish aims to facilitate the ecological and social transition. It does not claim to regulate the functioning of businesses as detailed in a study by Terra Nova2. It is part of a liberal approach above all else. Its ambition is to provide the economic community with a precise metric system to enable 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 balanced evaluation of an organization’s results, integrating economic, social and environmental aspects and linking them directly to performance economic. The concept of overall performance therefore means that there is a link between economic performance and environmental and social impact. However, the integration of this link into the companies’ business model is new and therefore unclear. The accounting requirements to which companies are subject ignore this. This is not why he was regularly warned, especially by certain industries such as Henry Ford who declared, in his time: “The two most important things do not appear on the company’s balance sheet: its reputation and its men.
In the project to review the provisions related to transparency on sustainability issues in Switzerland and the European initiative on which it is inspired, it proposes a holistic approach to establish an unbreakable link between financial and extra-financial issues. As the Terra Nova study points out, “so-called extra-financial data are drivers of financial phenomena”. In this way, the CSR reporting process is no longer meant to be a simple observation of best practices in place. On the contrary, it presents itself as a vector for prospective analysis. Along with its strict implementation, a set of indicators is obtained that allows “(…) to increase the visibility of the benefits obtained” and ”exactly reflect the data and DNA of the companies concerned”. Therefore, management bodies and members of the Board of Directors have valuable ways to measure the impacts, risks and opportunities arising from social and environmental factors. Therefore, the effort required to exercise transparency in CSR reporting certainly generates costs, but the 200 Swiss companies that could be affected by the new CO provisions, like the 50,000 European companies subject to the CSRD (ie 0.2% of companies in Europe). In return, the Union gains a competitive advantage over its competitors: that is to say having a tool that allows them to manage the relevant interactions between economic performance and social and environmental challenges, across their entire value chain. The ambition is to gradually shift the economic model from the era of “Shareholder Value” to the era of “Stakeholder Value” where it is now inseparable from the interests of other stakeholders and taking into account the interests of the shareholders.
1 Corporate Sustainability Reporting Guide
2 CSRD: the metric system of responsible business
Interview between Time.news Editor and Sustainability Expert
Time.news Editor: Good morning, and welcome to Time.news! Today, we have an exciting discussion lined up about the recent proposed review of transparency practices in sustainability within Switzerland. Joining us is Dr. Claudia Meyer, a leading expert in corporate sustainability and governance. Dr. Meyer, thank you for being here.
Dr. Claudia Meyer: Good morning! Thank you for having me. I’m excited to dive into this important topic.
Editor: Let’s start with an overview. This proposed review aims to enhance transparency regarding non-financial issues, such as environmental and social impacts, for companies in Switzerland. Could you elaborate on the significance of this initiative?
Dr. Meyer: Absolutely. This initiative is vital because it helps corporate stakeholders understand how a company’s operations affect the environment and society. By mandating detailed reporting on these impacts, companies are held more accountable, aligning their practices with the principles of sustainability. This transparency not only benefits the public and investors but also drives internal change within organizations.
Editor: That’s an interesting point. However, you mentioned that the business community seems largely unaware of these proposed changes. Why do you think that is?
Dr. Meyer: Many companies, particularly smaller or medium-sized ones, may feel overwhelmed by regulatory changes, especially when resources are already stretched thin. There is often a perception that sustainability reporting could bring additional administrative burdens and costs, which can create resistance. Education and outreach are crucial to engage them in this transformation.
Editor: The criticisms focused on potential costs and competitive disadvantages are quite pronounced. How do you respond to concerns that these new requirements could negatively impact Swiss businesses?
Dr. Meyer: It’s an understandable concern, but I would argue that investing in sustainability reporting is ultimately a strategic advantage. By adopting these transparency measures, companies can enhance their reputations and build trust with consumers. Moreover, the holistic approach of linking non-financial data to financial performance means that, in the long run, they can actually improve both their social responsibility and their bottom line.
Editor: Interesting! The concept of “overall performance” that you mentioned—how does it tie back into this review, and how can businesses adapt to these demands?
Dr. Meyer: The concept of overall performance, also known as the “triple bottom line,” emphasizes that economic success isn’t solely about profits—it also includes social and environmental aspects. For companies to adapt, they should actively integrate sustainability metrics into their business models. This requires a cultural shift and may involve additional training and resources, but it leads to more informed decision-making processes that can ultimately enhance overall performance.
Editor: You referenced a study by Terra Nova that asserts “extra-financial data are drivers of financial phenomena.” Can you explain the implications of this statement for businesses?
Dr. Meyer: Certainly. The essence of that statement is that issues such as environmental responsibility and social equity are increasingly influencing financial success. For example, consumers are more inclined to support brands that prioritize sustainability, impacting sales and market share. This trend suggests that dismissing non-financial factors could be detrimental to long-term profitability and growth. Businesses need to recognize this interconnectedness and begin to operate with a broader view of their impacts.
Editor: As we see more initiatives like the one in Switzerland and the EU’s CSRD guiding similar efforts, where do you think the future of corporate sustainability reporting is heading?
Dr. Meyer: I envision a future where sustainability reporting becomes standard practice, much like financial reporting is today. As global awareness of climate change and social issues grows, we’ll likely see increased regulatory pressure and demand for transparency. Ultimately, companies that embrace these changes will not only comply with legal requirements but will also lead in creating sustainable business practices that benefit everyone.
Editor: Thank you, Dr. Meyer, for sharing your insights! It’s clear that while challenges exist, the push for sustainability is more than just regulation; it represents a shift towards more responsible and conscious business practices. We appreciate your time today.
Dr. Meyer: Thank you for having me! I hope our discussion brings more awareness and dialogue around this critical issue.