Responsible business initiative heads closer to a national vote

On Tuesday, the Senate voted narrowly to reject talks on a counter-proposal on responsible business put forward by the House of Representatives Keystone / Anthony Anex

Parliament disagrees over a proposal to hold Swiss-based multinational companies accountable for human rights and environmental violations abroad. A nationwide vote on the issue is probable.

On Tuesday, the Senate, with a vote of 22 to 20, rejected discussion of the counter-proposal on responsible business put forward by the House of Representatives. It also rejected the popular initiative launched last year by a coalition of NGOs by a vote of 25 to 14.

With this decision, the counter-proposal heads back to the House of Representatives, which had voted to support it after some revisions. The next steps are unclear though. It is likely that the initiative could go to a nationwide public vote. 

The so-called “Responsible Business Initiative” External linkseeks to oblige companies based in Switzerland to assess the impact of their activities and those of subsidiaries on human rights and the environment at home and abroad. Swiss-based companies failing to exercise appropriate due diligence could be liable for damages.

Political divide

The discussions have revealed sharp political rifts. Even with revisions made to the counter-proposal, Ruedi Noser from the centre-right Radical Party argued that it is an “unnecessary and damaging regulation.” He warned that such regulations would disadvantage Swiss companies and they could be forced to withdraw from many countries.

Beat Vonlanthen from the centrist Christian Democratic Party argued that companies already recognise their responsibilities pointing to the Swiss chocolate industry’s commitments to source sustainable cocoa. He said that companies are already called to account for their actions based on existing laws and policies.

However, Christian Levrat from the leftwing Social Democratic Party argued that Swiss multinationals continue to violate human rights and destroy the environment. “They cannot continue to get rich by employing children and polluting. Impunity is over.” He also pointed out that the counter-proposal is weaker than legislation in force in neighbouring countries.

Another voice of support, Robert Cramer of the Green Party said that there is a reputational risk for Switzerland of not holding companies accountable. He also cautioned against waiting for the next big crisis such as the country experienced with banking secrecy.

Sticking points 

The counter-proposal presented to the Senate does not go as far as the original initiative in terms of liability. It included a subsidiary clause that would limit suits against a parent company to when it is considerably more difficult to bring a claim against the subsidiary abroad. 

This was not enough to convince certain economic associations in the country though. Karl Hofstetter, chairman of Swissholdings, told swissinfo.ch that the initiative provides “too broad and indefinite” liability. He added that the initiative and the counter-proposal approved would leave the door open to liability for the acts of third parties with which the companies have commercial relations without controlling them. 

“This does not mean that the economy is against any form of responsibility,” explained Hofstetter. In the first place, branches of Swiss companies must be held accountable in the countries in which they operate. “On the other hand, in serious cases, the legislation in force already provides for the possibility of asking the parent company in Switzerland to answer for acts performed by a subsidiary abroad.”

On at least one point, Franz Werro, a law professor at the University of Fribourg and University of Washington (Georgetown), agrees with Hofstetter in that in principle it is already possible to sue a parent company for the actions of a subsidiary abroad. 

But his interpretation of the rules under discussion differs radically from that of Karl Hofstetter: “Switzerland has adopted international standards, like all other OECD countriesExternal link. It’s now about making them effective.” 

In his opinion, the initiative and the counter-project are not groundbreaking but rather, follow a general global trend. “The possibility of suing a parent company for damages caused by a subsidiary is present in most European countries. And whether it’s there in law or in case law does not make a fundamental difference. The law simply makes things clearer,” he declared.