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25 Apr 2024


Commentary: "What the EU crackdown on supply chains means for Swiss companies"

After years of debate, the European Parliament agreed this week to back two new laws that create obligations on companies to tackle human rights abuses in their supply chains. On April 23 the parliament gave the greenlight to rules that would ban products from EU export and import if they are made with forced labour.

A day later, European parliamentarians adopted sweeping legislation requiring companies to not only identify human rights and environmental risks but to take measures to address them. If they fail to do so, they will be liable for damages in the EU.

Both laws represent a shift away from regulators’ hands-off approach to corporate breaches of human rights in supply chains, says Nicolas Bueno, a professor of human rights law at UniDistance Suisse who has been following the EU process for years...

Although Switzerland isn’t an EU member, Swiss companies that do business in the EU will be affected by the laws. The EU accounts for 58% of Switzerland’s trade volume, making it the country’s largest trade partner.

Under the EU forced labour law, national authorities in the 27-member bloc will investigate suspicious goods, supply chains and manufacturers. If products are made with forced labour, they will be banned from sale in the EU and intercepted at EU borders. This includes products sold via e-commerce sites such as Temu and Amazon...

The other law, called the Corporate Sustainability Due Diligence Directive, applies to companies with 1,000 or more employees and a turnover of €450 million (CHF440 million) or more in the EU. This means that large companies both inside and outside the EU including from Switzerland will be subject to the law. Swiss companies may also be indirectly affected if they are in the value chain of large companies...

“Switzerland must pass a corporate responsibility law as well,” wrote the Coalition for Corporate Justice in an emailed statement, adding that they are preparing a popular initiative on the topic for a nationwide vote.

Last December the Swiss government said it would analyse how EU member states implement the due diligence law and decide how to proceed.