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Opinion

Human rights due diligence: Swiss civil society pushes the envelope

Switzerland is a small country, but home to a large number of well-known multinational corporations (MNCs, e.g. Nestlé, Novartis, ABB, UBS, Credit Suisse, Syngenta, Glencore and Swatch, to name a few).  Over the past decade, Switzerland has been an important player in the global debate on business and human rights.  The UN Special Representative on Business and Human Rights, John Ruggie, reported to the Human Rights Council in Geneva, and the Swiss government was an early supporter of his mandate, which produced the UN Framework on Business and Human Rights, and its accompanying Guiding Principles (GPs), which the Council unanimously adopted in 2011.

And yet, not many people in the business and human rights community are aware of a significant initiative that is unfolding in Switzerland, and that was triggered by a civil society movement. In 2011, the Swiss Coalition for Corporate Justice[1] (SCCJ, comprising over 50 NGOs) launched The Corporate Justice Campaign, calling on the Federal Council (executive body) and Parliament to “create the legal basis for companies headquartered in Switzerland to respect human rights and the environment throughout the world.”

SCCJ has two key demands.  One is to lift the “corporate veil” between Swiss parent companies and their subsidiaries by introducing mandatory human rights and environmental due diligence for the former.  Another is to reduce the barriers to access to justice that victims currently face in Switzerland (e.g. to allow victims of violations of human rights and environmental norms by these companies, their subsidiaries and suppliers, to sue the perpetrators in Switzerland to obtain redress).  The campaign put the demands in a petition, gathered over 135,000 signatures and presented the document to Parliament in 2012.

Although the petition was rejected, it led to several actions.  Notably, the Parliament asked the government to produce: a national action plan (NAP) on business and human rights (expected in summer 2015); a comparative law report on other countries’ human rights and environmental due diligence measures with regard to company activities (published in May 2014);[2] and a report on access to remedy for victims of corporate-related human rights abuses (in progress).[3]

The question of states’ exercise of extraterritorial jurisdiction when companies domiciled in their territory are associated with human rights violations outside that territory has been referred to as the “most complex and controversial issue within the State duty to protect pillar” of the UN Framework.  At the end of John Ruggie’s mandate, this issue remained one of the biggest grey areas of the framework, thus contributing to major human rights organizations’ assertion that the third pillar, “access to remedy”, is the weakest of the framework.  In this vein, Human Rights Watch has explicitly called for governments to mandate human rights due diligence.  More recently, the Access to Justice project has called on the EU to consider the “potential utility” of the concept of mandatory human rights due diligence.

States’ extraterritorial obligations regarding corporate impact on human rights have been the subject of thoughtful recent research.[4]  The US Dodd-Frank Wall Street Reform and Consumer Protection Act, Section 1502 on “conflict minerals”, is often cited as a nascent example of a government requiring human rights-related due diligence in relation to companies’ overseas activities.  France’s lower chamber of parliament is considering a proposed law that would require parent companies to perform due diligence on their subsidiaries and subcontractors overseas, and would allow victims access to justice and reparation.  The proposed French law provides that if a company cannot prove it took preventive measures, civil and criminal penalties would apply.

The Swiss coalition has cited these and other examples as a sign of states’ movement toward mandating human rights due diligence.  And in fact, in September 2014, the Foreign Affairs Committee of the Swiss Lower Chamber adopted a motion (14.3671) demanding that the Federal Council draft a law requiring Swiss companies with overseas operations to undertake human rights and environmental due diligence.  The Federal Council recommended a rejection of the motion, proposing simply a reporting obligation instead.  In a parliamentary debate this week, the Lower Chamber first accepted, then narrowly rejected the motion for the draft law, to the disappointment and frustration of the Coalition.

The SCCJ had earlier welcomed the Swiss government’s recognition of the problem, but in a recent press release it criticized the proposed solutions as focusing only on voluntary measures, with “neither government nor Parliament…prepared to take the necessary next step and to formulate legally binding requirements on companies based in Switzerland.”[5]  In an interview with the Swiss press in late January, John Ruggie was asked his view of this criticism.  He responded, “I think the Swiss government will find that there are certain mandatory policies that they will have to adopt” to get in line with other governments, such as mandatory “non-financial” reporting.

The Coalition has recognized the need for a push in Switzerland, which is why it announced early this year that it was launching a popular initiative that would demand mandatory human rights and environmental due diligence throughout Swiss companies’ business operations, with due diligence based on the steps outlined in the GPs: risk assessment, preventive measures and reporting. The Coalition will begin collecting signatures in May. If it gathers 100,000 signatures in 18 months, the measure will be put to a binding referendum.

While it is unclear how things will unfold, the Coalition has pushed the envelope on a subject that sits near the top of the global business and human rights agenda: how to ensure that companies be held accountable at home for corporate-related human rights violations that take place overseas, and how to prevent these violations in the first place.  The way this initiative has developed is perhaps not easily replicable elsewhere because of Switzerland’s unique tradition of direct democracy.  But as a fascinating and important example of an effort to strengthen all three pillars of the UN Framework, it is well worth watching.

*Elizabeth Umlas, PhD, is a Swiss-based independent researcher and consultant in the field of business and human rights. She teaches at the University of Fribourg, Oxford University and the University of Geneva, and is currently senior advisor on capital stewardship to two global union federations.

 


[1] Known in French as “Droit sans frontières” and German as “Recht ohne Grenzen.”

[2] The report also considers “conceivable solutions” for Switzerland. Note that, in November 2014, John Ruggie wrote an open letter to two Swiss federal councilors commending the government for the “concrete proposals on due diligence” in the report https://business-humanrights.org/en/swiss-foreign-affairs-committee-calls-for-mandatory-human-rights-due-diligence-for-companies-0#c106965.

[3] The report is supposed to cover judicial and non-judicial mechanisms in other countries that allow victims of corporate-related human rights abuses to seek justice in a company’s home state. The Parliament’s postulate also calls on the Federal Council to consider what measures Switzerland might undertake to guarantee better access to justice for victims.

[4] See, for example, D. Augenstein and D. Kinley, “When Human Rights ‘Responsibilities’ Become ‘Duties’: the Extra-Territorial Obligations of States that Bind Corporations” in S. Deva and D. Bilchitz, Human Rights Obligations of Business (Cambridge Univ. Press, 2013); Skinner et al, The Third Pillar (ICAR, CORE, ECCJ, December 2013) and Amnesty International, Injustice Incorporated (2014). The Maastricht Principles also “clarify extraterritorial obligations” of states in the area of economic, social and cultural rights, including in relation to the conduct of non-state actors such as corporations  http://www.etoconsortium.org/nc/en/library/maastricht-principles/?tx_drblob_pi1[downloadUid]=23

[5] Shortly thereafter, the UN Committee on the Rights of the Child, in its Concluding Observations on Switzerland, noted (with regard to the business sector) its concern that “the State party solely relies on voluntary self-regulation and does not provide a regulatory framework which explicitly lays down the obligations of companies acting under the State party’s jurisdiction or control to respect the rights of the child in operations carried out outside of the State party’s territory”.