Due diligence and transparency regarding minerals and metals from conflict areas and child labor

Art. 964j of the Swiss Code of Obligations (CO) has created a new basis for non-financial reporting in the course of the revision of the Stock Corporation Act. The obligation to prepare such a report for the first time relates to the (currently ongoing) financial year 2023 and must be presented at the 2024 Annual General Meeting. Affected are companies with their registered office, head office or principal place of business in Switzerland that are active in the transfer or processing of defined “conflict minerals” or whose products or services give rise to reasonable suspicion of child labor.

The due diligence obligations consist of the establishment and, in particular, the implementation of an adequate compliance organization. The legislator refers to this as a “management system”, in which the supply chain policy is defined and a system for tracing the supply chain is established. Compliance with due diligence obligations, unlike reporting, must be audited by an approved auditing company.

Large companies under the supervision of the Swiss Financial Market Supervisory Authority (FINMA) are now required to prepare an annual report on the fulfillment of due diligence obligations regarding conflict minerals and child labor in the future. This report must be submitted for approval by both the highest governance body and the body responsible for approving the annual financial statements. In addition, it is envisaged that the report will be published in electronic form. However, it is not required that an independent review of the report be conducted. In the event of non-compliance, however, the companies concerned could face fines.