11.3 Legal Risks Associated with Greenwashing

11.3.1 Greenwashing in the Context of Sustainability Reporting Under the Swiss Code of Obligations and the SIX Regulations

Sustainability-related disclosure obligations notably aim to combat greenwashing by standardizing communications and making them comparable and ensuring data reliability.¹ Among other things, large Swiss companies that have listed shares or bonds on a stock exchange in Switzerland or elsewhere are subject to a general reporting requirement with regard to environmental issues in accordance with Art. 964a et seq. of the Swiss Code of Obligations (“CO”) and on climate-related issues in particular in accordance with the Climate Reporting Ordinance.

By law, the board of directors is responsible for reporting. Decision-makers who deliberately or negligently report incorrect information or fail to provide the necessary reports face prosecution (Art. 325ter Swiss Criminal Code). 

Although foreign companies listed on the SIX Swiss Exchange (“SIX”) are not subject to the Swiss Code of Obligations, Art. 7a of the SIX Directive on Information relating to Corporate Governance requires them to provide similar information in their annual corporate governance report, provided that they do not issue an equivalent report under foreign law. Breaches of this rule are sanctioned by SIX Exchange Regulation, the regulatory arm of SIX. Potential penalties include fines of up to CHF 10 million, or up to CHF 1 million in the event of negligence, suspension of trading and, in extreme cases, de-listing. A non-anonymized press release on the process will be published in all cases (“naming and shaming”).

Companies listed on SIX can voluntarily notify SIX that they have opted in to sustainability reporting systems under an internationally recognized standard (e.g., SASB or GRI).² As a result, they will be added to the list of reporting companies on the SIX website, where their reports will also be linked, and will become subject to supervision by SIX with regard to their compliance with the relevant reporting requirements.

11.3.2 Greenwashing as Unfair Competition and Fraud 

According to the Swiss Federal Act on Unfair Competition (“UCA”), it is unfair to provide false information for oneself or others about, for instance, a company, product, service, or business relationship (Art. 3 b UCA).

Fraudulent concealment of, among other things, the properties, benefit, or hazardous nature of goods or services also qualifies as unfair (Art. 3 i UCA). 

As part of “the CO₂ Act for the period after 2024”, an addition to the UCA has been adopted as of 1 January 2025 according to which the following will also be deemed unfair in the future: “Statements about oneself or one’s goods, work, or services in relation to the impact they have on the environment [...], which cannot be substantiated according to objective, verifiable principles.” (Art. 3 para. 1 x of the UCA draft). This corresponds to the definition of greenwashing used by the EU and FINMA. 

If greenwashing involves the provision of incorrect information or fraudulent concealment, it can be subject to prosecution (Art. 23 UCA) and lead to civil action for cessation and desistance or removal or compensation claims (Art. 9 UCA). Criminal charges and civil action may be brought by consumers, competitors, and the State Secretariat for Economic Affairs (“SECO”).

SECO primarily takes action based on reports from consumer protection organizations and the public prosecutor’s office. Several proceedings related to greenwashing are already pending with SECO. A decisive factor in criminal proceedings will be whether statements of fact were made that can be proven to be false. Deviations from existing sustainability standards can play a role here. A further requirement is that of “dolus eventualis”, i.e., that the risk of deception was at least accepted.

In extreme cases, deliberate greenwashing may ultimately qualify as fraud under criminal law. For this to be the case, a person must have willfully prejudiced another’s financial interests by false pretenses or concealment of the truth with a view to securing an unlawful gain for himself or herself (Art. 146 of the Swiss Criminal Code). Financial losses may well be incurred due to greenwashing, especially in the capital market. An action is assumed to be “willful” if a lie is hardly verifiable or is based on false evidence such as scientific studies or certificates.

11.3.3 Practice of the Swiss Commission for Fairness 

As a self-regulatory organization run by the communication industry, the Swiss Commission for Fairness (Schweizerische Lauterkeitskommission) assesses complaints relating to unfair competition. Its decisions, which it publishes and which regularly attract considerable media attention, are recommendations rather than binding rulings. In general, however, companies implement them immediately. If the Commission assesses a piece of advertising as being unfair, this entails reputational risks and – because the Commission makes reference to the Swiss Federal Act on Unfair Competition (UCA) – can also be a starting point for civil, criminal, or supervisory proceedings.

The standards and practice of the Commission for Fairness contain a wealth of information. In its evaluations, the Commission relies both on its own principles of “fairness in commercial marketing”, which are derived from the UCA, and on section D, “Environmental Claims in Marketing Communications”, of the Advertising and Marketing Communications Code of the International Chamber of Commerce (“ICC Code”). 

Art. D1 of the ICC Code prohibits misleading environmental claims or visual depictions of products or activities. The following in particular are prohibited: 

• Overstatement; 

• Misleading use of statistics; 

• Implication that individual environmental aspects extend to the whole product or company; 

• Insufficient clarity regarding what an environmental claim relates to; 

• Naming environmental aspects that do not exist, are not relevant for the product or are not likely to apply for the entirety of the product’s life; 

• Making non-specific environmental claims if they are not generally valid; 

• Claiming that a product or activity has no environmental impact or only a positive impact unless a very high standard of proof is available; 

• Claiming to have accomplished sustainability objectives if there are no definitive, generally accepted methods for measuring or implementing them; 

• Pursuant to Art. D2: using environmental jargon or referring to scientific findings related to the environment inappropriately, without reliable scientific evidence or in a way that cannot be readily understood by the intended audience.

In Art. D2–D7, the ICC Code contains additional, specific regulations and also refers to ISO 14021 on “Self-declared environmental claims” and the ICC Framework for Responsible Environmental Marketing Communications with further examples, definitions of common terms, and a checklist of environmental claims. Public companies should take these regulations into account when formulating internal policies.

The Swiss Consumer Protection Foundation (Stiftung für Konsumentenschutz) recently submitted numerous complaints about greenwashing, in some cases involving well-known companies, to the Commission for Fairness. The Commission has already qualified sustainability-related marketing as unfair in a number of cases. In individual cases, the Consumer Protection Foundation simultaneously submitted a request to SECO to file criminal charges with the responsible public prosecutor’s office.

11.3.4 Greenwashing as Price-Sensitive Information – Ad hoc Publicity, Insider Trading Law, Market Manipulation

Sustainability claims and, above all, scandals involving potential greenwashing can influence investors’ investment decisions and thus have an impact on market prices. As non-public, significant, price-sensitive information, they are subject to the ad hoc publicity requirement defined in Art. 53 of the SIX Listing Rules (“LR”) and must be disclosed to the market immediately via the prescribed channels.

Examples of price-sensitive information might include the internal adoption of a new sustainability strategy with far-reaching consequences for the company, the failure to achieve a key sustainability objective, or the discovery of greenwashing within the company or by the most important contractual partner. SIX’s sanctions practice has also classified the announcement of a new strategy at a press conference, when not pursued in earnest, as a breach of the ad hoc disclosure obligation (Decision DK/AHP/I/02 of May 15, 2002, Art. 2.1c). Delayed publication or selective notification of relevant information to individual investors or in an interview also violates ad hoc publicity requirements. The possibility to postpone disclosure permitted in Art. 54 LR is likely to be unavailable in such cases.

A failure to provide factual, clear, and complete information in the ad hoc announcement as stipulated in Art. 15 para. 2 of the Guideline of SIX on Ad hoc Publicity, i.e., if the ad hoc announcement itself constitutes greenwashing, would also be a breach of the ad hoc publicity requirement.

If the ad hoc publicity obligation has been contravened, SIX Exchange Regulation can impose the sanctions mentioned above.

Insider trading law prohibits significant, price-sensitive, non-public, sustainability-related information or information on potential greenwashing from being passed on or exploited for transactions with shares or derivatives (Art. 142 and 154 of the Financial Market Infrastructure Act, “FinMIA”).

Furthermore, sustainability claims that give false signals to the capital market can, in certain circumstances, constitute market manipulation, which is penalized under supervision law, or price manipulation, which is prosecuted under criminal law (Art. 143 and 155 FinMIA). 

In cases involving a breach of insider trading law or violation of the ban on market manipulation, FINMA can impose various sanctions including issuing a declaratory ruling, publishing such a ruling, and confiscating any profits. In cases of intent or where there is a desire to gain a pecuniary advantage, the Office of the Attorney General may initiate criminal proceedings, which can lead to either custodial sentences or monetary penalties (Art. 154 and 155 FinMIA).

11.3.5 Prospectus Liability and Marketing Regulation Under Financial Market Law 

The provision of false sustainability-related information or the withholding of sustainability-related facts in a prospectus for a public offer of securities or for their admission to trading or in a key information document on certain financial instruments may trigger prospectus liability if it leads to a loss on an investment (Art. 69 of the Financial Services Act, “FinSA”). The same applies to statements in “similar communications” related to a public offering or the listing of new securities. Willful provision of false information or the withholding of material facts in a prospectus are subject to prosecution under criminal law (Art. 90 para. 1 a. FinSA).

Sustainability claims in the investor information must always correspond to the details in a published prospectus or a key information document supplied (Art. 68 para. 3 FinSA). FINMA can penalize breaches of this rule by supervised financial institutions under supervision law. For other market participants, a violation of this principle can have consequences under civil law, which are not discussed in further detail here.³

Unlike EU law, Swiss financial market law does not have a general prohibition against false or misleading investor information; the legislative process explicitly referenced the UWG (Unfair Competition Act) in this context. As a result, FINMA is not responsible for cases of greenwashing in the capital market outside of the mentioned prohibition against deception within collective investment law and its general supervision of banks, insurance companies, and financial institutions.

11.3.6 Liability of the Company, the Board of Directors and Executive Management

The company, the board of directors, and the executive management can all be held accountable for greenwashing under various titles (“climate litigation”), such as in the form of liability for unfair competition (Art. 9 para. 3 UCA). There are further liability risks outside of Switzerland. One that can be singled out is responsibility under company law:

If a false or misleading sustainability-related communication is attributable to a breach of corporate responsibilities on the part of the board of directors or executive management, the members of these bodies risk being held personally liable (Art. 754 et seq. CO).⁴ Besides general due diligence requirements, this may also constitute a breach of the duties of overall management, overall supervision, organization, risk controlling, or reporting (Art. 716a, 717, 964c para. 1 CO). Claiming the pursuit of sustainability objectives or compliance with internal processes that are not actually implemented is likely to indicate a breach of the due diligence obligation on a regular basis. The “business judgment rule”, which is also recognized by courts in Switzerland, offers little immunity against liability in the case of breaches of information-related duties. 

However, not every false statement in marketing materials or a report constitutes a relevant breach of corporate responsibilities under liability law. For liability to be established, harm must be suffered by the company or, more typically in cases of greenwashing, by shareholders (e.g. in the form of a reduced share price), as well as slight negligence at least. While the procedural hurdles are high, the risks of litigation are likely to increase with growing public pressure and the establishment of sustainability standards. Suitable prevention measures are therefore essential.