Sustainability reporting in Switzerland

This question was also addressed by the authors of the ZHAW study, in which 500 Swiss companies from the SME sector participated. Ten interviews were also carried out with experts in the field. ZHAW lecturer Andreas Buchs, who worked on the study, highlights a key finding: “In around 90 percent of the companies surveyed, the company’s management is noticeably committed to promoting sustainability – but most companies refrain from preparing a sustainability report.” Despite this reluctance, entrepreneurs and experts agree that sustainability reporting will continue to gain importance for SMEs. Why is this the case? Companies that do not meet the criteria for non-financial reporting in the Code of Obligations are not affected by it at all.

There are good reasons for SMEs to manage sustainability issues and report on them externally. First of all, there is growing pressure from outside: even though many Swiss SMEs are not directly affected by the new national and international regulations, they may be indirectly affected. As suppliers to companies that are themselves subject to EU regulation, for example, they may have to provide sustainability information. Otherwise, they risk being removed from the supplier list so as not to impact sustainability performance and customer compliance. According to the study, this is also likely to be increasingly the case in the awarding of public contracts in Switzerland in the future.

Finally, the general public is also increasingly interested in information about the risks and impacts of a company’s business activities on the environment and its employees. From the point of view of companies, this pressure can help to increase their own attractiveness as an employer in times of a shortage of skilled workers. For example, the companies that already write sustainability reports, or are planning to do so, mainly gave an intrinsic motive. According to this, the voluntary sustainability documentation is intended to contribute to positioning them as a responsible company on the market.

When asked about the biggest challenges, a clear picture emerges: companies often have difficulty creating the data material, and the necessary human resources are also often lacking. So it’s no wonder that more than half of the companies surveyed that are already reporting or want to do so in the near future want to use the help of external consultants.

The good news first: the Swiss standards-setter Swiss GAAP FER is working on an SME guideline to support companies in implementing holistic sustainability management. This also includes sustainability reporting.

Practical support is also necessary when looking at the patchwork of content of Swiss sustainability reports. According to the ZHAW study, companies apply a wide range of rules. Of the companies that are guided by a standard or framework, most apply the standards of the Global Reporting Initiative (GRI) or are guided by the Sustainable Development Goals (SDGs). Apart from that, however, a significant proportion of companies do not write the sustainability report according to any specific set of rules.

In addition to the ecological indicators, it is also challenging to comply with the predominantly qualitative benchmarks for corporate governance and social issues in order to meet the holistic requirements of ESG. SMEs should therefore first establish sustainability management – and only then report. In this way, they also protect their management and boards of directors.

Many Swiss companies have already integrated the principle of sustainability into their strategy. They are becoming more diverse, more attractive, saving energy, changing energy sources for operations and products, renovating buildings, accelerating processes and reducing resource consumption through recycling and redesign. They also use “technology shifts,” for example, to improve cybersecurity. In view of the fact that the process of moving towards sustainable corporate management is highly complex, only a few key tasks are outlined here:

1. Stocktaking
   The first step is to analyze the business model with regard to environmental and social concerns as well as the corresponding governance in order to know where the company stands. Good governance structures are important because they create commitment, ensure quality and save time. As well as practical tools such as esg2go and Energy Check-up there are also several partner solutions available for this type of analysis on the UBS Marketplace, such as the Cyber Security Check.
2. Setting strategic priorities and goals
   On the basis of an initial analysis, the Board of Directors, Executive Board and stakeholders can set sustainability priorities and define goals.
3. Integration into value creation
   The transformation process is complex and turns all those affected into participants, especially employees, customers and suppliers. External expert advice is recommended to embed the sustainability principle in the strategy and functions of the company as well as for the necessary financial and time planning.
4. Creating and implementing an action and investment plan
   The investment planning is aligned with the goals – for example, the reduction of CO₂ emissions in line with the federal government’s target of net zero by 2050. This must be done in accordance with financial possibilities. Sustainability criteria are part of short-, medium- and long-term financing, for example, through sustainability-linked loans or green loans.
5. Evaluation
   The success of all measures must be measured regularly in line with financial and sustainability reporting. On this basis, the activities are reviewed and, if necessary, goals are readjusted. The use of tools like es2go must therefore become routine.
6. Leading knowledge through partnerships
   Partners can be found along the entire value chain, from material suppliers to end customers, depending on the industry. Know-how, best practices and innovations can be used throughout Switzerland and internationally through networking (the UBS Roundtable, for example).