Switzerland: Debate intensifies around Initiative for responsible business conduct launched by NGO coalition

Swiss Coalition for Corporate Justice

In April 2015, a coalition of Swiss civil society organizations launched a public initiative to hold Swiss companies to account for human rights abuses committed abroad. The initiative seeks mandatory human rights due diligence requirements for all Swiss companies.

The Federal Council (Swiss Government) rejected to recommend the initiative for adoption and also did not 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. On 2 May 2018, the Legal Affairs Committee of the National Council 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.

However 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. The dossier is now back with the Council of States again.

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 plenary vote would take place in September. 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.

If the Council of States adopts the counter-proposal, it will go back to the National Council and then - if the amendments are approved - to a final vote in both chambers. The Council of States was scheduled to discuss the proposal of its Legal Affairs Committee on 26 September, however - in a move criticised by the initiative committee - the debate was postponed until after the parliamentary elections on 20 October. Senators had called for more time to consider a counter-proposal submitted by the Swiss Government, although this is limited to reporting obligations for companies.

A referendum on the Responsible Business Initiative will take place in February 2020 at the earliest.

Further information is available in German here.

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Article
10 October 2019

UN experts raise concerns over Swiss Government's position on 'Responsible Business Initiative'

Author: Swissinfo

"UN experts raise concerns over Swiss ‘responsible business’ initiative", 1 Oct 2019

"We are concerned to read that the Federal Council [the government] has expressed a preference for voluntary commitments" by multinationals regarding their human rights responsibilities for their supply chains, a rapporteur at the UN Committee on Economic, Social and Cultural Rights declared...

Switzerland was defending its record before 18 independent experts from the Committee on Economic, Social and Cultural Rights (CESCR), which monitors states’ commitments to the International Covenant on Economic, Social and Cultural Rights...

[T]he head of the Swiss delegation, Valérie Berset Bircher, said discussions on a possible counter-proposal for the responsible business initiative were continuing in parliament...

Switzerland’s parliament remains at logger-heads on how to hold companies accountable for their overseas operations...

Action plans on links between business and human rights and corporate responsibility are due to be revised by the end of the year. In August, the government asked companies to submit a report on the human rights impact of their activities. But the executive body refuses any additional responsibility from these actors beyond the regulations in force.

Swiss officials were questioned for several hours on Tuesday about their report to the CESR, which was submitted three years late...

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Article
30 September 2019

Swiss upper house debate on proposed human rights due diligence legislation postponed

Author: Jessica Davies Plüss, Swissinfo.ch

"Why delaying debate on responsible business isn’t winning any fans", 27 Sep 2019

The long-anticipated debate in the Swiss Senate on the counterproposal to hold multinationals accountable for actions abroad was postponed indefinitely, and most certainly until after parliamentary elections on October 20.  

Senators called for more time to consider the facts and alternatives, but campaigners called the delay tactic a move in favour of big companies. 

If the Senate had agreed on a solid compromise, campaigners may have been willing to pull the initiative altogether. Florian Wettstein, director of the Institute for Business Ethics at the University of St. Gallen and member of the initiative committee, [said] that using delay tactics to undermine the initiative may ultimately backfire on lawmakers.   

“We have seen an impressive new wave of support for the initiative in recent days partly as a direct response to these tactics”...  

Swiss economic lobby groups have already been called out for misunderstanding the role of regulation. And as Wettstein outlined.., the country runs the risk of falling behind as more countries [...] push ahead with laws on human rights due diligence.

Some companies have already come out in support of the initiative, but it seems that a vote remains a ways off...

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Article
10 September 2019

Unofficial translation: Statement of the initiative committee on the counter-proposal to the Responsible Business Initiative

Author: Swiss Coalition for Corporate Justice

Note: This is an unoffical summary translation of the statement, orginally published in German here

On 4.9.2019, the Legal Affairs Committee of the Council of States announced that it had requested its Council to adopt their counter-proposal to the Responsible Business Initiative...

The Legal Affairs Committee’s proposal addresses – unfounded – criticism by some business associations and certain members of the Council of States who fear a counter-proposal would lead to a "flood of lawsuits" against companies...

To address these "arguments", the Legal Affairs Committee now proposes, among other things, that any complaint must be preceded by a special and obligatory arbitration procedure before the National Contact Point (NCP) for the OECD Guidelines. NGOs have been critical of the NCP based on experience, however since the initiators are concerned with rapid improvements for people on the ground, the initiative committee is prepared to accept the current counter-proposal. In concrete terms, they would withdraw the Responsible Business Initiative if the counter-proposal were to be adopted in the version put forward by the Legal Affairs Committee on 3 September 2019 or in the version adopted by the National Council on 14 June 2018...

After almost two years [...] a compromise between both chambers of parliament, parts of the business community and the initiators seems to be in reach. The Council of States will discuss the proposal on 26 September...

In the meantime, the initiators will continue preparing for a possible voting campaign as long as there is no final decision by the two parliamentary houses...

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Article
9 September 2019

Legal Affairs Committee of Swiss upper house supports civil liability of companies

Author: Secretariat of the Committee for Legal Affairs

[Note: This is an unofficial summary translation by Business & Human Rights Resource Centre of the Swiss Parliament's press release. The original is available in FrenchGerman and Italian. See above for more context.]

4 September 2019

The Legal Affairs Committee of the Council of States concluded the detailed content discussion of the indirect counter-proposal to the Responsible Business Initiative, which it had begun at its meeting on 12 August 2019. The Committee proposed by 7 votes to 5 with 1 abstention to adopt the counter-proposal in the overall [plenary] vote. 

With 8 votes to 5, the Committee supported a counter-proposal which includes civil liability of companies. A minority requested that the liability provisions be removed and the proposal to be limited to mandatory due diligence and reporting. With 7 votes to 6, the Committee, like the National Council, refrained from proposing a subsidiarity regulation. A minority requested its introduction. They believe that the plaintiffs, where reasonable, should take action against subsidiaries abroad.

By 7 votes to 2 with 4 abstentions, the Committee requested the introduction of a special arbitration process. This is intended to settle disputes arising from claims brought against a company under the civil liability provisions included in the indirect counter-proposal. The Committee proposes the National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises as the special arbitration authority. The Committee has introduced this new arbitration process in order to restrict access to justice and thus prevent an increase in court cases. 

The Council of States will discuss the matter in its autumn session.

Article
20 August 2019

Legal Affairs Committee of Swiss upper house affirms political will for an indirect counter-proposal to Responsible Business Initiative

Author: Secretariat of the Committees for Legal Affairs

[Note: This is an unofficial summary translation by Business & Human Rights Resource Centre of the Swiss Parliament's press release. The original is available in FrenchGerman and Italian. See above for more context.]

14 August 2019

Following the Council of States' decision on 12 March 2019 to reject an indirect counter-proposal to the Responsible Business Initiative, the National Council on 13 June 2019 decided to stick to its counter-proposal. The Committee [Legal Affairs Committee of the Council of States] has now decided by 7 votes to 4 with 1 abstention to follow the National Council and thus requests its Council [of States] for the second time to support the indirect counter-proposal. 

At its next meeting, the Committee would like to conclude the detailed content discussion of the indirect counter-proposal and submit its proposals to the Council of States in the autumn session. In its press release dated 5 April 2019, the Legal Affairs Committee of the National Council set out a number of principles which, in its view, are important for further discussion and development of the proposal. The Committee will examine these aspects as part of the content discussion. It has already taken note of a comparative legal study by the Swiss Institute of Comparative Law on the legal situation in Europe with regard to parent company liability.

Article
13 June 2019

Swiss National Council insists on Responsible Business counter-proposal

Author: Swissinfo

"Parliament keeps Responsible Business counter-proposal alive", 13 June 2019

...One chamber [of Switzerland's Parliament] is insisting on a counter-proposal to a people’s initiative that would ward off a nationwide vote on the issue.

Thursday’s decision puts the House of Representatives on a collision course with Senate, which had earlier rejected the watered-down version of the Responsible Business Initiative. Senate will later have a second vote on whether to accept or reject the counter-proposal.

If rejected, the voters of Switzerland would then have the final say [on] the issue.

At stake are proposed new laws that would hold Swiss-based companies legally accountable if their overseas subsidiaries violate human rights or environmental standards...

In the House of representatives on Thursday, parliamentarians voted by 109 votes to 69 (with seven abstentions) to yet again accept a counter-proposal to the initiative...

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Article
13 June 2019

Swiss National Council votes in favour of pursuing an amended proposal to the Responsible Business Initiative

Author: SDA

"Nationalrat will Konzerne in die Pflicht nehmen", 13 June 2019

[unofficial summary translation of the SDA press release on the Swiss Parliament's website]

On Thursday 13 June 2019, the Swiss National Council [the Parliament's lower house] voted in favour of an indirect counter-proposal to the citizen Responsible Business Initiative. 

A year ago, the National Council had already agreed to take up the concerns of the Initiative and decided on legal rules meant to serve as an indirect counter-proposal [which maintained key elements of the Initiative]. The Council of States [the Parliament's upper house/Senate], however, then rejected a counter-proposal [in a first vote in March 2019]. The National Council has now confirmed its decision to pursue a counter-proposal [and referred the dossier back to the Council of States].

The National Council will not be able to discuss the content again until the Council of States agrees to a counter-proposal. However, reaching such an agreement could be difficult.

If the Parliament were to adopt the initial version of the counter-proposal, the organisers would withdraw their Initiative.

Article
13 June 2019

Switzerland weighs the merits of mandatory human rights due diligence

Author: Sam Jones, Financial Times via Swissinfo

"Switzerland weighs the merits of being the global good guy", 13 June 2019

...The Responsible Business Initiative... is straightforward in its intent. Companies based in Switzerland, it states, will be liable for the misdemeanours of their subsidiaries worldwide - and potentially liable for the conduct of any organisation with which they do significant business...

Switzerland is hardly alone in considering such requirements on business... Britain’s Modern Slavery Act came into force in 2015, France’s Duty of Vigilance law in 2017... 

Companies should... shoulder more responsibility for abuses across the world. But working out who in a supply chain or corporate web is legally responsible for a misdemeanour, accident or crime, is a fiendish task... 

[I]f parliament cannot agree on a counterproposal, the initiative as formulated in its original popular petition is put to a national referendum... Popular support for ethical constraints on businesses is relatively high in Switzerland...

[T]he time when companies could sidestep legislation on such matters - or offer to regulate them themselves - is probably over in Europe. Consumers expect companies to behave sustainably and responsibly. Shareholders are weary of costly lawsuits or political risks related to corporate malfeasance. 

...An era of harder compliance is here already and Switzerland cannot afford to fall behind.

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Article
11 June 2019

Switzerland: Investors call on parliamentarians to support legislation for mandatory human rights due diligence

Author: Ethos

Ethos Foundation and 22 Swiss and foreign institutional investors, who represent assets under management of CHF 395 billion, sent a statement to the members of the lower house... [T]he signatories call on parliamentarians to back the introduction of mandatory human rights due diligence by supporting the counter-proposal to the responsible business initiative...

"As institutional investors, we have a responsibility to consider whether the companies we are investing in have negative impacts on human rights and the environment and, if so, to prevent and mitigate these impacts", explains Vincent Kaufmann, CEO of Ethos Foundation. “Reputational and operational risks related to human rights breaches have a significant negative financial impact on the companies in which we are shareholders".

Adopted by the lower house in June 2018 before being rejected by the upper house in March, the counter-proposal is to be discussed again on Thursday 13 June in the lower house. For the signatories of the declaration, ... [t]he disclosure and processes required by the mandatory due diligence under the counter-proposal would thus give investors the opportunity to better analyze how companies manage and mitigate their human rights and environmental impact, thus enabling institutional investors to fulfill their fiduciary duty towards their beneficiaries.

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Article
13 March 2019

Switzerland: Responsible business initiative heads closer to public vote as Council of States rejects counter-proposal

Author: Jessica Davis Plüss and Andrea Tognina, Swissinfo

"Responsible business initiative heads closer to a national vote", 12 March 2019

On Tuesday, the Senate, with a vote of 22 to 20, rejected discussion of the counter-proposal on responsible business put forward by the House of Representatives. It also rejected the popular initiative launched last year by a coalition of NGOs by a vote of 25 to 14.

With this decision, the counter-proposal heads back to the House of Representatives, which had voted to support it after some revisions. The next steps are unclear though. It is probable that the initiative could go to a nationwide public vote. 

The so-called "Responsible Business Initiative" seeks to oblige companies based in Switzerland to assess the impact of their activities and those of subsidiaries on human rights and the environment at home and abroad. Swiss-based companies failing to exercise appropriate due diligence could be liable for damages...

The counter-proposal presented to the Senate does not go as far as the original initiative in terms of liability...

This was not enough to convince certain economic associations in the country though...

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