Ten years in the making, a proposal on how to keep Swiss-based companies in check is set to come to a vote on Sunday. A possible yes-vote will have ramifications beyond Swiss borders.
This content was published on November 28, 2020 – 17:00
The so-called Responsible Business Initiative is one of two issues on the ballot sheet, which are serving as a test of the Swiss economy’s moral grounding. The second initiative concerns whether the central bank and other major institutional investors should be allowed to invest in arms manufacturers.
Left-wing parties backing the initiatives say Switzerland’s reputation as a place for ethical and responsible business is at stake.
Under the Responsible Business Initiative, Swiss-based firms would have to prove they have taken due care to prevent abusive labour conditions and environmental damage in their own operations and supply chains abroad. If they fail to do so, individuals or organisations could sue companies for abuses.
In theory, the proposed constitutional amendment would apply to all Swiss companies, but the initiators say exceptions will be made for smaller companies in low-risk sectors.
What Swiss voters decide will have ramifications outside Switzerland. It could send a signal to other countries about how to rein in corporate abuse at a time when the European Commission is considering similar rules. Given Switzerland has one of the highest concentrations of multinational companies, experts also suggest that any changes to Swiss laws could have ripple effects in small and big companies around the world.
According to the latest polls, the initiative has captured a majority of voters, but it has lost some ground in the last few weeks. If the initiative fails to win a majority, a counter-proposal developed by parliament that doesn’t include a liability clause would come into force.
Shared goal, wrong way
Opponents of the initiative, which include most large multinationals, major industry lobby associations as well as the government and a majority of parliament, have said that they are aligned with the basic vision and goals of the initiative. What they disagree with is how to get there.
Industry groups argue that companies already take responsibility for cleaning up their supply chains through voluntary measures including procurement policies, auditing, industry collaborations, and investments in communities where they operate. They believe that holding them legally liable in Swiss courts for abuses abroad is too far-reaching.
“The initiative would introduce new standards for corporate civil liability that are unique in the world” is how Swiss Minister of Justice Karin Keller Sutter summed up the government’s opposition to the initiative.
In interviews, some company executives from Novartis, Nestlé and LafargeHolcim have said that they fear a flood of lawsuits for actions of suppliers beyond their control. This could cause them to question whether to invest in high-risk countries, where they argue, foreign investment provides jobs and other benefits.
Backers of the initiative, however, say that companies can’t be counted on to regulate themselves and that legal liability ensures that victims of corporate abuse receive access to justice.
The threat of liability is also intended to ensure that companies take their responsibility seriously. “If there are no sanctions, few companies will do anything,” said Florian Wettstein, a business ethics professor at the University of St Gallen and a member of the initiative committee.
Some legal experts have also said that the costs and practical hurdles to bringing a case in Switzerland means that a flood of lawsuits is unlikely.
As the initiative proposes a change to the constitution, some of the most controversial points of the initiative would still need to be worked out in parliament. This includes whether small to medium-sized enterprises would also be affected and whether companies can be held liable for actions by third-parties, which are under the control of – but not owned by the Swiss company.
Campaign tactics
The campaign has intensified in the last few weeks, with both sides launching attacks and accusations at each other.
Activist groups backing the initiative have used images of child labourers and tried naming and shaming certain companies as part of an emotional plea to voters. Swiss commodity and mining giant Glencore, agribusiness company Syngenta and cement producer LafargeHolcim have been popular targets of the campaign.
Some companies have pushed back, taking out full-page advertisements in local papers or publishing promoted Twitter posts defending their records on the environment and human rights.
The committee behind the initiative has built a grassroots movement of supporters across the country equipped with orange flags, postcards and billboards. Reports say initiative opponents have invested around CHF8 million ($8.8 million) to fight the initiative. It’s said to be one of the most expensive campaigns in recent years, but no detailed figures are available.
A long road
The initiative was launched by an alliance of NGOs more than five years ago and is supported by church groups, human rights groups, trade unions and political parties mainly from the left. It is the latest stage in a ten-year campaign by civil society organisations for ethical business activities.
The United Nations adopted principles on business and human rights in 2011 which Switzerland implemented in a national action plan five years later based on the international guidelines. However, they do not include binding measures for companies.
The Swiss parliament has gone through several debates and iterations of the initiative. The last counter-proposal put forward by parliament didn’t go far enough to satisfy the initiative backers, who decided to let the Swiss voters have the final say.
One of the most prominent supporters is an internationally renowned human rights expert and former centre-right politician, Dick Marty. He has argued that it is time for Switzerland, a country with the highest number of multinational company headquarters per inhabitant, to act and be known as a home for ethical, responsible business.
