Game on for Swiss corporate responsibility vote

Children in an artisanal gold mine in Burkina Faso: With the change in the law passed by parliament, multinational companies are subject to a duty of due diligence for raw materials in conflict areas and child labour. However, the responsible business initiative also wants rules on the legal liability of companies. Pep Bonet / Noor Images

After years of discussion, a popular vote on the “responsible business initiative” is now a sure thing. Parliament, opposed to the initiative, has adopted a counter-proposal that avoids new rules on legal liability of multinationals. The campaign promises to be heated; the result is uncertain.

How can multinational companies ensure that their subsidiaries respect human rights and the environment in the various areas of the world where they operate? This issue has long been discussed at a global level.

In Switzerland the debate has been particularly lengthy and complex, thanks to a popular initiative launched in 2015 by a coalition of NGOs, associations and unions. The responsible business initiative is based on two pillars: an obligation for multinationals to conduct due diligence in the area of human and environmental rights, and the definition of legal liability for any violation of this obligation.

The government opposed the initiative, proposing to parliament that it be submitted for a popular vote without a counter-proposal.

The House of Representatives, aware of the popularity of the issue, nevertheless preferred to draw up an indirect counter-proposal that took on board the broad strokes of the initiative while limiting its scope. The hope was to induce supporters to withdraw the initiative.

However, the House of Representatives didn’t reckon with the Senate, which tenaciously opposed the counter-proposal formulated by its fellow parliamentarians. After a lengthy push and pull, the Senate opted for a new counter-proposal drawn up by the government.

In the end, the Senate got its way. A conciliation conference backed the key tenets of its proposal and the House of Representatives fell in line.

If the original initiative is rejected at the ballot box, parliament’s amendment to law will enter into force. In this, multinational companies are required to report on issues such as human rights, the environment and corruption. There are also due diligence obligations regarding raw material extraction in conflict zones and child labour.

The proposal does not, however, include new rules on legal liability, which is the real bone of contention in the whole debate.

In line with European legislation

During the last stage of the parliamentary debate, Justice Minister Karin Keller-Sutter repeated that the proposal now adopted by parliament was in line with directives in force in the European Union. Stricter regulation than in other countries would result in the loss of some of Switzerland’s competitive advantages as a location for large multinational companies.

For the government and the majority of parliament it is also a matter of safeguarding tens of thousands of jobs.

The issue is not going to disappear from the international political agenda any time soon. The race for raw materials, only temporarily slowed by the Covid-19 pandemic, will continue to give rise to social conflicts and environmental damage in the coming years.

Discussions are also taking place in the EU and in individual countries about tightening rules on corporate responsibility.

It is possible that Switzerland will at some point again find itself following the lead of other countries in this area.

The spectre of fat cat salaries

The spectre of the overwhelming success of the initiative on fat cat salaries in 2013 hangs over the future vote. Back then, after lengthy discussions, parliament had also adopted a counter-proposal but couldn’t clip the initiative’s wings.

The responsible business initiative currently seems to enjoy broad popular backing. A survey carried out in May on behalf of the initiative’s promoters indicates 78% support. Other surveys provide less striking data, but there is no doubt that the initiative enjoys support beyond voters on the political left. At the heart of the debate is an ethical issue which moves the middle-classes as well.

The game appears to be wide open.

(Translated from Italian by Thomas Stephens)