Switzerland’s imprimatur to new climate law and its impact on Swiss businesses

Jun 19, 2023

On 18 June 2023, the majority of Swiss voters voted in favour of the climate and innovation bill (Federal law on the goals in climate protection, innovation and the strengthening of energy security (KIG)). It is a remarkable milestone for Switzerland as this requires Switzerland to become carbon neutral by the year of 2050.

Melting glaciers, drought, less snow, deluges, and other associated events have been the major concern for Switzerland as regards its vulnerability to the climate crisis over the years. A study shows that the average temperature in Switzerland has risen by 2.5° C over the span of past 150 years, double the global average. It is believed that this legislation will help Switzerland combat these challenges.

The major focal areas of this legislation are to reduce greenhouse gas emissions and utilise negative emission technologies, adapt to and safeguard against the effects of climate change, direct financial flows towards low-emission and climate change.


Rhone glacier river retreated in Switzerland from 1850 to 2010 (VAW-ETHZ, 2010)

With the objective of Switzerland becoming a carbon-neutral country by 2050, this legislation mandates the federal government to ensure that greenhouse gas emissions are reduced by at least 75 percent by 2040 compared to 1990 levels. The federal government along with the cantonal authorities are also ordained to take all the required steps and set example in achieving net-zero emissions by 2040. Benchmarks with regard to reducing greenhouse gas emission have also been specified in this legislation for different sectors such as building sector, transport sector and industry sector. The building sector, transport sector and industry sector must ensure a minimum reduction of 82 percent, 57 percent and 50 percent respectively in greenhouse gas emissions by the year of 2040, while both the building and transport sectors have been obliged to sew up greenhouse gas emissions by 100 percent by 2050 and the industry sector have been commanded to reduce greenhouse gas emissions by 90 percent by 2050.

The Swiss financial sector is also required by this legislation to make an effective contribution to low-emissions and climate-resistive development by taking measures to reduce the climate impact of national and international financial flows and by focusing more on climate-friendly orientation of financial flows.

The mentioning of the promotion of new technologies and processes in the legislation is indeed timely. This will help businesses understand the significance of opting for different technologies and/or technological services to have net zero emissions by 2050.

With a profound understanding of the significance and gravity of the new climate and innovation law, we confidently offer our software equipped with a range of ESG features. We firmly believe that these features will aid businesses to successfully achieve the targets set forth by this ground-breaking legislation.

Written by:

Mohammed Rakib-ul-hassan

Research & Legal Analyst

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