Swiss due diligence initiative set for public referendum as Parliament only opts for reporting-centred proposal

Swiss Coalition for Corporate Justice

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 all 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 on 2 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. 

UPDATE: 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. Now that this is not the case, the Responsible Business Initiative is set for public referendum, possibly in November. If the initiative is dismissed by the population, the counter-proposal just adopted by the Parliament would enter into force.

Further information is available in German here.

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Article
9 June 2020

Swiss Parliament adopts reporting-focused proposal

Author: SDA (national press agency of Switzerland)

Note: This is an unofficial summary translation by Business & Human Rights Resource Centre, the original article is available in German here.

The Swiss Responsible Business Initiative is set for public referendum alongside an indirect parlimentary (counter-)proposal. The Council of States on Tuesday approved its own concept that had [also] been put forward by the parliamentary conciliation committee...

The debates focused on the two different proposals of the two houses: That of the Council of States, which the National Council has now also accepted [on Monday], does not contain any new liability regulations....

...The organisers [of the Responsible Business Initiative] had [...] said they would withdraw their initiative if the [earlier, more stringent counter-proposal] version adopted by the National Council [in June 2018] were confirmed during the [final] council debates. Now that this is not the case, both the initiative and the [reporting-focused] counter-proposal [just] adopted by Parliament are headed for popular vote...

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Article
9 June 2020

Switzerland to hold referendum on proposed human rights due diligence law

Author: Antony Crockett, Elsa Savourey, Oliver Elgie & Jerome Temme, Herbert Smith Freehills LLP

A referendum on a Swiss civil society initiative on mandatory human rights and environmental due diligence for companies is expected to be held towards the end of the year...

Under Swiss law, a public initiative supported by at least 100,000 signatories can become the topic of a nationwide referendum. In 2016, the organisers of the “Responsible Business Initiative” obtained the required signatures for a far-reaching proposal to introduce mandatory human rights due diligence and direct liability of businesses for breaches of human rights and environmental standards (Proposal). In particular, the Proposal:

  • ...extends the application of Swiss law ... to any company under the de facto control of a Swiss company, including in some cases parts of their supply chains and subcontractors;
  • makes it mandatory to conduct human rights and environmental due diligence;
  • introduces direct liability of companies..; and
  • reverses the burden of proof in part...

[T]he Swiss legislature can prepare a counter-proposal which, if accepted by the organisers of the initiative, becomes the law. In this case, the two chambers of the Swiss parliament prepared diverging counter-proposals. The first counter-proposal would have replicated the key aspects of the Proposal; the second contains [certain] due diligence requirements ... but without the provision for liability of parent companies...

On 5 June 2020, the conciliation committee ... voted in favour of the latter, softer approach, which was approved by both chambers of parliament the following week. The members of the Responsible Business Initiative have already rejected the softer counter-proposal... This opens the door for a referendum on the Proposal and the parliamentary counter-proposal in late 2020.

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Article
5 June 2020

Swiss Responsible Business Initiative: Parliamentary committee opts for proposal without liability rules; public to vote in autumn 2020

Author: Reuters

"Swiss to vote on companies' global liability for rights abuses", 4 June 2020

Swiss voters look set to get the final say on whether Swiss-based companies should be liable for human rights abuses and environmental violations in operations even outside Switzerland.

...Swiss politicians are under pressure to find an economically viable counterproposal to a far-reaching constitutional amendment put forward by the Responsible Business Initiative campaign...

On Thursday, a parliamentary committee trying to iron out differences in legislation approved by the upper and lower houses chose a more business-friendly solution rejected by the initiative’s organisers...

Both chambers of parliament still have to vote on the compromise next week. If one of the chambers rejects it, voters will decide on the initiative, likely in November, without any counterproposal...

Under Switzerland’s direct democracy, supporters can force a binding referendum if they gather 100,000 voter signatures.

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Article
26 May 2020

Support for public Responsible Business Initiative continues to grow

Author: Swiss Coalition for Corporate Justice

A survey conducted between 5 and 12 May 2020 shows: Today, 78% of eligible voters would vote in favour of the Responsible Business Initiative. This means that the approval rate remains constant compared to the results of February 2020, while at the same time many new supporters are joining the initiative.

The current crisis affects many people heavily. The consequences for economic policy are barely foreseeable today. For broad circles, however, it is self-evident that the reconstruction of the economy must occur in a sustainable manner. CEOs of major international companies such as l’Oréal, H&M or Unilever, are calling for «Green Recovery» in a joint declaration with political decision-makers and stakeholders: According to this declaration, the economic reconstruction project should be socially and ecologically sustainable. Rules for corporations regarding compliance with basic human rights and environmental standards form its foundation. This is also reflected in the announcement of the European Commissioner for Justice that he will now quickly ensure more effective rules and sanctions in relation to corporate responsibility within the framework of the «European Green Deal»... Meanwhile, support for our cause continues to grow in Switzerland...

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Article
26 May 2020

Swiss parliamentary process on mandatory human rights due diligence proposal approaches final stage

Author: Swiss Coalition for Corporate Justice

"STAGES OF THE RESPONSIBLE BUSINESS INITIATIVE IN PARLIAMENT", May 2020

1) 10 October 2016 – Submission of the Responsible Business Initiative with 120’000 valid signatures. [...]

4) 23/2, 20/4, 4/5/2018 – The National Council’s Legal Affairs Committee prepares an indirect counter-proposal to the Responsible Business Initiative... The authors of the initiative are prepared to compromise and, despite numerous trade-offs, give their assurance that they will withdraw.

5) 14 June 2018 – The National Council approves the counter-proposal by 121:73:2 votes. [...]

7) 12 March 2019 – The Council of States decides by 22:20 non-approval of introduction of the counter-proposal. [...]

10) Summer 2019 – Federal Councillor Keller-Sutter launches her own fig-leaf-like counter-proposal... [...]

12) 21 November 2019 – The Council of States’ Legal Affairs Committee maintains the original concept of the counter-proposal. However, a strong minority accepts the Federal Councillor’s fig-leaf-like proposal and attempts to sell a mere “reporting obligation” as a counter-proposal.

13) 18 December 2019 – The Council of States joins the minority and votes for the fig-leaf-like proposal. [...]

16) 11 March 2020 – For the fourth time, the National Council votes in favour of its counter-proposal.

17) 15 March 2020 – Due to the Corona crisis the parliament aborts its session.

Pending [2.-19. June]:

- Third and final resolution of differences in the Council of States.

- Possible meeting of a conciliation committee.

- Agreement on a counter-proposal or complete abandonment.

- Final votes on counter-proposal and initiative.

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Article
6 March 2020

Switzerland: Lower House reaffirms commitment to proposed human rights due diligence legislation

Author: Swiss Coalition for Corporate Justice

"National Council sticks with compromise proposal", 4 March 2020

Today, Switzerland’s National Council reaffirmed its counter-proposal to the Responsible Business Initiative. This proposal was forged through a compromise between the Legal Affairs Committees of both parliamentary chambers. It is also supported by an important group of business actors such as a major Swiss retail sector association (IG Detailhandel), the Multinational Companies Grouping (Groupement des Entreprises Multinationales GEM) or the Federation of Entrepreneurs of the French-speaking part of Switzerland (FER), as well as by the authors of the initiative.

The counter-proposal, however, contains a number of painful concessions for the authors of the initiative: The counter-proposal’s binding rules apply to only the largest of multinational corporations and its liability provisions were massively curbed. Notwithstanding these cutbacks, the initiative committee assured it would withdraw the initiative should the National Council’s counter-proposal be enacted into law. The committee argued that the counter-proposal allows for a faster introduction of legally binding measures than would be possible through the path of a popular vote on the initiative. The speed with which new measures can be implemented is particularly important for those whose human rights are being violated...

This item of business will now move back to the Council of States...

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Article
31 January 2020

Switzerland: Legal Affairs Committee of Lower House reaffirms commitment to proposed human rights due diligence legislation

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, orginally available in German and French.

In the 2019 winter session, the Council of States adopted an indirect counter-proposal to the Responsible Business Initiative. The Council of States’ and the National Council’s proposals were discussed by the National Council's Committee for Legal Affairs on 31 January, which voted by 14 votes to 5 with 6 abstentions to stick to the National Council's indirect counter-proposal and revised it.

The Commission believes the National Council's draft would offer clearer guidelines and more legal certainty with regards to the issues the Responsible Business Initiative aims to address. The regulation would work with familiar Swiss legal systems, whereas the Council of States‘ proposal would have to operate with terms unknown to Swiss law, taken from EU law. The Commission points out that, according to the Council of States' proposal, the question of Swiss parent company liability for foreign subsidiaries would be governed by foreign law, resulting in legal uncertainty. According to the National Council's alternative proposal, the question of liability would be assessed solely under Swiss law and the conditions under which a company would be liable would be limited in many respects compared to existing liability under current law and would be more precise. The Commission has revised the National Council’s original proposal in several points, drawing on the proposals of the Legal Affairs Commission of the Council of States from 21 November 2019 and adapting these in specific areas.

The resolution of the differences with regards to an indirect counter-proposal will be continued in the spring session. The bill must be put to a final vote in the spring session of 2020, along with the popular initiative, for a conditional withdrawal of the initiative to still be possible. The bill still needs to be discussed twice in each Council before then.

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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