Switzerland Joins TCFD Bandwagon

    Stockholm (NordSIP) – As climate change concerns continue to rise in relevance across the financial industry, regulators are finding it easier to motivate enhanced environmental disclosures on the financial industry on competitiveness grounds.

    Now, the Swiss Federal Council announced the parameters for future mandatory climate reporting by large Swiss companies aligned with the recommendations of the Task Force for Financial Disclosures (TCFD). The Federal Department of Finance (FDF) had been developing these parameters since December 2020 and included exchanges with business associations and environmental and consumer protection associations in May 2021, which welcomed the parameters. The Council will prepare a consultation draft by summer 2022.

    The decision would make Switzerland the tenth country to adopt the TCFD recommendations following similar decisions by New Zealand, the UK and the other six G7 nations and Hong Kong.

    The parameters of the mandatory climate reporting that is expected to apply to large Swiss companies has four focuses. The federal council focused on coverage, content, purpose and timing.

    Coverage-wise, the disclosures are expected to apply to public companies, banks and insurance companies with 500 or more employees, more than CHF 20 million in total assets or more than CHF 40 million in turnover are obliged to report publicly on climate issues.

    As far as the content of the disclosures is concerned, follows the EU’s double materiality line. The reporting should include the financial risk that a company incurs as a result of climate-related activities as well as the impact of the company’s business activities on the climate and the environment.

    The goal of the minimum requirements is to ensure that disclosures are meaningful, comparable and, where possible, forward-looking and scenario-based. Finally, timewise, the implementation of the TCFD recommendations is expected to take place from 2024 for the 2023 financial year by means of a separate executive order on the counter-proposal to the responsible business initiative. This procedure should increase legal certainty.

    Image by marcelkessler from Pixabay

    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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