Swiss Sustainable Corporate Management Act: A New Due-Diligence Framework in Consultation

Executive Overview

On 1 April 2026 the Federal Council opened consultation on a new Federal Act on Sustainable Corporate Management. The proposed legislation is intended to strengthen the protection of human rights and the environment while preserving legal certainty and taking the competitiveness of Swiss companies into account. It is a consultation draft, not final law, and its content may still change before any parliamentary treatment.

For companies the relevant question is therefore not compliance with a text that does not yet exist, but readiness. The direction of travel is consistent: supplier due diligence, risk mapping, documentation and board-level reporting are moving from voluntary corporate practice towards a defined governance expectation. Groups that begin structuring these processes now will face an adjustment exercise rather than a construction exercise once the final rules are known.

Regulatory Background

The project is designed as an indirect counterproposal to the responsible-business popular initiative. The Federal Council has indicated that the framework will draw on relevant international standards and that obligations will be concentrated on larger companies, with relief for SMEs. The perimeter of the regime, and the precise scope of the relief for smaller businesses, are among the points that the consultation is intended to clarify.

Because the draft is at consultation stage, its practical consequences should be read with caution. What can reasonably be inferred is the architecture: an obligation framed around due diligence rather than guaranteed outcomes, addressed principally to larger undertakings, and anchored in recognised international reference standards. How the duties will be supervised, and what documentation will be expected in support of them, will depend on the final legislative text.

Why It Matters

The consultation is relevant well beyond the companies that would fall directly within the perimeter, because supply-chain expectations travel down contractual chains and are already reflected in banking, audit and counterparty processes.

• Swiss companies and groups with international supply chains, for which supplier due diligence and risk mapping would become part of ordinary corporate governance.
• Holding structures and Swiss parent entities, which need to understand where responsibility for group-wide due diligence would sit.
• Entrepreneurs and owner-managed businesses, which may fall outside the direct perimeter yet still receive due-diligence requests from larger clients.
• Investors and family offices, for whom sustainability governance is increasingly part of investment review and exit preparation.
• Foreign companies with Swiss operations, which need to reconcile the emerging Swiss framework with due-diligence obligations already applicable elsewhere.
• Advisers and boards, who will be asked whether existing risk and procurement processes are capable of supporting a formalised duty.

Practical Issues to Review

1. 01Establish whether the company would plausibly fall within the perimeter for larger undertakings, and monitor how that perimeter evolves during the consultation.
2. 02Map the supply chain by risk rather than by volume, identifying the relationships where human-rights or environmental exposure is most plausible.
3. 03Review existing procurement and contractual documentation to determine what due-diligence, information and remediation rights already exist.
4. 04Define how risk findings are escalated, who decides on them and how those decisions are recorded.
5. 05Clarify board-level reporting: what the board receives, at what interval, and on what evidentiary basis.
6. 06Assess whether existing risk-management, compliance and legal functions can absorb the process without creating a separate parallel structure.
7. 07Track the outcome of the consultation and the shape of the final text before committing to system or contractual changes that may need to be reversed.

TCC View

In our view, the principal risk for companies at this stage is over-reaction. Building a dedicated ESG bureaucracy in anticipation of a consultation draft usually produces documentation that satisfies no one: it is detached from the operational reality of procurement, it duplicates existing risk processes, and it is difficult to maintain once attention moves elsewhere. Sustainability due diligence is more durable when it is integrated into the processes that already govern supplier selection, contracting, legal review and board oversight.

The second consideration is proportionality. The draft framework, as presented, distinguishes between larger undertakings and SMEs, and companies should resist the temptation to apply the heaviest plausible interpretation to every entity in a group. A structured risk-based approach — deeper analysis where exposure is real, lighter monitoring elsewhere — is both more defensible and more sustainable than uniform coverage. What matters is the ability to demonstrate how the assessment was made, not the volume of material produced.

Planning Note

Before acting, companies should distinguish clearly between what the consultation proposes and what is currently binding. The sensible preparation is to document existing supplier due-diligence practice, identify the gaps that would be difficult to close quickly, and assign responsibility for monitoring the legislative process. Contractual programmes and reporting systems should be designed so that scope can be widened or narrowed once the final Swiss rules are adopted, rather than rebuilt.