Switzerland votes against increasing corporate liability for rights violations abroad

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While provisional government results on Sunday showed more than 50% of voters approved of the Responsible Business Initiative, it did not garner support from the majority of cantons, or Swiss states. Both are necessary for a referendum in the country to pass.

The initiative divided public opinion in Switzerland, a hub for trade in consumer goods, finance and raw materials. Supporters of the Responsible Business Initiative hung banners and signs on balconies and fences across the country. Swiss banks and other powerful corporations, meanwhile, have run costly newspaper ads warning of dire consequences for the economy, stepping up their efforts in recent weeks.

“Accepting this initiative would encourage Swiss companies to settle in other countries, which would lead to the loss of valuable jobs and taxable assets in Switzerland”, Swiss credit (CS) CEO Thomas Gottstein and other senior bank executives cautioned about a newspaper ad.

The Responsible Business Initiative reportedly required Swiss companies to assess human rights and environmental practices not only of their own operations, but also of their subsidiaries, suppliers and business partners, ensuring that they comply with standards. international. Companies could then have been held liable in Swiss courts for violations committed by subsidiaries and suppliers they control, unless management could prove that due diligence had been exercised.

The Swiss government also opposed the initiative and supported a watered-down alternative. This counter-proposal will now enter into force, forcing companies to increase their reporting on environmental and social issues, with particular emphasis on child labor and conflict minerals.

In a statement, Glencore praised the outcome of the vote on Sunday. The countermeasure, said a spokesperson, is “internationally aligned and will effectively promote the protection of human rights and the environment with further transparency and due diligence measures.”

The Swiss campaign is part of a larger shift in the way societies view the role and responsibilities of business.

France has already enacted a blanket law that holds companies accountable for abuses throughout their supply chains, although the Swiss government has claimed that the Responsible Business Initiative would have imposed even greater liability on companies. The European Commission is expected to come up with new human rights and environmental due diligence rules along supply chains in 2021.

In the United States, President-elect Joe Biden has said he will require state-owned companies to disclose more climate risks in their supply chains. And earlier this year, the U.S. House of Representatives passed a bill that would require publicly traded companies to audit their supply chains for forced labor in China’s predominantly Muslim province of Xinjiang.

“The calls for this are getting louder, and there is a lot of momentum behind it,” Rachel Barrett, environment and climate change partner at the global law firm, told CNN Business. Linklaters, at CNN Business.

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