How long can Switzerland walk the corona tightrope?

Our analysis of what the biggest global companies in Switzerland are up to. This week: state power in times of corona, Lonza emissions investigation, and child labour in the cocoa industry.

The coronavirus crisis has reminded us that government can wield a big stick even in the most competitive market economies.

After new daily coronavirus cases topped 8,000 this week, the Swiss people were bracing for a return to a nationwide shutdown. But on Wednesday the government opted to keep the economy rolling foregoing the kind of drastic measures taken in neighbouring countries like France and Germany. This has left some questioning if business is really pulling the strings.

Power dynamics between the state and industry have shifted in many countries during the crisis in ways many people have never seen before. In an interview in the Tages-Anzeiger newspaper over the weekend, German historian Ute Frevert explained that “the state reins in capitalismExternal link, directs it along certain lines, allows it to succeed or not. In recent years it seemed to be the other way around”.

She added that the drastic measures to contain the virus were not the result of some moral duty but rather about survival and keeping society afloat (although billionaires didn’t suffer too much either thanks to government bailouts). But it is rarely an either-or choice between the economy and health. Few companies can keep operating when half their employees are sick with Covid-19 or in quarantine.

When the Swiss vote on November 29, they face similar questions. Where, when and how should the Swiss government rein in business activities that could put people and the environment in other countries at risk? Or should we leave it to the companies and individuals to decide?

The latest poll shows the Responsible Business Initiative has solid support, but whether it can maintain it remains to be seen. It’s uncertain how the coronavirus crisis will affect the vote if at all but what is clear is the crisis has proven the state can take the reins when it wants to.

What else caught my eye?

Lonza allegedly tried to hide massive nitrous oxide emissions from authorities and shareholders. According to an investigation by Tages-Anzeiger, the Swiss chemical company discovered nitrous oxide emissions in 2017 that were far above normal levels but didn’t immediately report it. The laughing gas contributes more to global warmingExternal link than many other greenhouse gases but fits in a gray zone in national environmental laws. Although there is a clear solution to neutralising the gas, Lonza has resisted paying for it, writes the paper.

Novartis adds manufacturing muscle behind potential Covid-19 treatment. This week the Swiss pharma giant sealed a deal with Zurich-based biotech firm Molecular Partners to develop, manufacture and commercialise an early-stage anti-Covid-19 treatment drug. This comes a couple months after the Swiss government signed an agreement with Molecular Partners for first access to a potential treatment it develops against Covid-19. It’s unclear how much the government handed over and the terms of the deal.

Swiss cocoa industry received a sobering reminder of the scale of child labour in West Africa. A long-awaited US Department of Labour report released last week revealed that child labour increased by 14% in the last decade, and more than 90% of the children were doing hazardous tasksExternal link. Industry groups all had prepared statements admitting that they had no idea how complex the situation was when they vowed to eradicate child labour 20 years ago.

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