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28 Nov 2020

Switzerland: Responsible Business Initiative rejected at ballot box despite gaining 50.7% of popular vote

In April 2015, a coalition of Swiss civil society organizations launched, and in November 2016 filed a public initiative to hold Swiss companies to account for human rights abuses committed abroad. The initiative would trigger a binding vote on a constitutional amendment to introduce mandatory human rights due diligence requirements for Swiss companies.

Under the Swiss system, government or parliament can try to persuade initiators to withdraw an initiative by suggesting a counter-proposal. The Federal Council (Swiss Government) did not recommend the initiative for adoption or issue a counter-proposal. In November 2017, the Legal Affairs Committee of the Council of States, the Swiss Parliament's upper house, decided to issue a counter-proposal. In December 2017, the Legal Affairs Committee of the National Council (lower house) decided not to support the counter-proposal of its sister committee, however in May 2018 revised its position and put forward a concrete legal proposal to the National Council. On 14 June 2018, the plenary of the National Council adopted the bill. 

On 19 February 2019, the Legal Affairs Committee of the Council of States adopted a counter-proposal. It differs from the National Council's proposal in that it introduces a clause on limited liability for subsidiaries of Swiss companies. Swiss civil society has criticised the clause, saying it essentially renders the proposal toothless.

On 12 March 2019, the Council of States decided to reject both the Responsible Business Initiative and the counter-proposal of its Legal Affairs Committee. The matter was referred back to the National Council, which on 13 June 2019 reaffirmed its decision and voted in favour of an indirect counter-proposal.

On 14 August 2019, the Legal Affairs Committee of the Council of States communicated its intention to enter into discussion of the counter-proposal and requested the Council of States to support such a counter-proposal. The Legal Affairs Committee also released a comparative study (partly in English) by the Swiss Institute of Comparative Law, the purpose of which was to examine whether the counterproposal would lead to a uniquely rigorous liability regime. The study found that parent company liability exists to some extent - either in legal literature or in law - in all countries analysed.

On 4 September 2019, the Legal Affairs Committee of the Council of States once more requested the Council of States to adopt the counter-proposal. It also proposed, among other things, the introduction of a special arbitration process intended to settle disputes arising from claims brought against a company. On 10 September 2019, the Swiss Coalition for Corporate Justice stated it would withdraw its initiative if the counter-proposal were adopted in either the version put forward in September 2019 by the Legal Affairs Committee of the Council of States or in the version the National Council adopted on 14 June 2018.

On 18 December 2019 the Council of States voted against this due diligence counter-proposal and instead adopted a proposal encouraged by the Government, limited to reporting and issue-specific due diligence without liability rules and thus strongly criticised by civil society and others.

On 31 January 2020, the Legal Affairs Committee of the National Council reaffirmed its commitment to and voted in favour of its more substantial counter-proposal, with parent company liability rules and broad due diligence obligations. In March 2020, the National Council decided to follow the decision of its Legal Affairs Committee and stick to its counter-proposal. 

On 2 June, the Council of States decided to abide by its weaker proposal. On 4 June, a parliamentary conciliation committee trying to iron out differences in the proposals put forward by both houses opted for the reporting-centred proposal that only extends to due diligence obligations regarding child labour or conflict minerals and contains no liability rules. It was approved by both the National Council (by a narrow majority) and the Council of States on 8/9 June. This proposal was supported by right-wing and conservative parties and major business association Economiesuisse. The more stringent proposal with liability rules and broad mandatory due diligence had been supported by nine mid-sized business associations and companies like Nestlé; the organisers of the Responsible Business Initiative had stated they would withdraw their initiative if the counter-proposal were adopted in this version. As this was not the case, the Responsible Business Initiative is set for public referendum on 29 November, after intense weeks of campaigning in which supporters of the initiative were even faced with defamatory videos.

On 29 November, the Responsible Business Initiative was narrowly rejected. While the initiative received 50.7% of the popular vote, it only gained 8.5 of the required 12 regional majorities across Switzerland's cantons. A majority of both the popular vote and cantonal vote is needed for an initiative to pass. The reporting-centred proposal without liability rules adopted by the Parliament will go through a public consultation period, which will end on July 14. If approved the final text will enter into force on January 1, 2022.

The organisers of the civil society initiative expressed their disappointment but nevertheless see strengthened support for their cause.

Further information is available in German here and in French here.