Switzerland: Debate intensifies around Initiative for responsible business conduct launched by NGO coalition
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 of the Government of Switzerland 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 Parliamentary 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 Swiss Commission for Legal Affairs 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 Commission for Legal Affairs. 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.
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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"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...
Swiss National Council votes in favour of pursuing an amended proposal to the Responsible Business Initiative
"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.
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.
Switzerland: Investors call on parliamentarians to support legislation for mandatory human rights due diligence
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.
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...
Author: Swiss Coalition for Corporate Justice via European Coalition for Corporate Justice
"Another step towards the adoption of a mandatory HRDD bill in Switzerland", 16 July 2018
On the 14th June, the National Council (first chamber in the Parliament) in Switzerland approved a counter-proposal to the citizen Responsible Business Initiative (RBI)...
[T]he National Council’s counter-proposal represents a compromise among the views of the RBI’s proponents, the Parliament and the business community. It has gathered the support of [...] John Ruggie, and of the business association representing 90 Swiss multinational companies...
Nonetheless, [...] the counter-proposal widely reduces the scope of the law, as it only applies to large companies. Civil liability provisions are also importantly restricted [...] (a table comparing the two proposals can be consulted in the SCCJ’s website).
Despite its shortcomings, the counter-proposal represents an important step forward... The process to adopt and implement the counter-proposal is also quicker than the one to adopt the RBI...
For these reasons, the RBI’s committee had committed to withdraw the initiative if the counter-proposal was adopted by the National Council...
The Council of States (upper chamber in the Swiss parliament) has still to vote the text, something which is expected for next fall or winter...
More information on the RBI evolution , legal table and more, on the bhrinlaw.org website.
Read the text of the initiative with explanations, here.
Switzerland: Natl. Council adopts corporate human rights due diligence bill; NGO calls it a compromise but welcomes step forward
Author: Simon Bradley, swissinfo.ch (Switzerland)
"Swiss firms lack 'unified approach' on business and human rights", 14 June 2018
Companies in Switzerland are quite active when it comes to corporate social responsibility, but a common approach is lacking and many large firms are unfamiliar with their international human rights obligations, says business ethics campaigner Chantal Peyer. Peyer, head of business and human rights at the Swiss non-governmental organisation Bread for All, was in Geneva on Thursday for the Second Swiss Global Compact Dialogue... Bread for All is part of a coalition of 105 NGOs, church groups, unions and campaigners behind the Responsible Business Initiative, currently a hot political topic in Switzerland...
swissinfo.ch: On Thursday, the House of Representatives [National Council] adopted a counter-proposal to the Responsible Business Initiative, which is less binding in terms of human rights obligations. The Senate [Council of States] must still vote on it. Can this counter-proposal really improve the situation for victims whose human rights may have been violated by Swiss firms?
C.P.: We were disappointed as we were forced to compromise and drop lots of elements from our initiative in favour of the counter-proposal. But it's a compromise that allows us to take a step forward, and something which we intend to support if it is not modified anymore. In fact, it enables us to go much faster in finding solutions to these issues, as we will have a legal text and not a constitutional change, which could take years with parliament.
Even though the initiative has been watered down, the counter-proposal contains two fundamental elements from the initiative. First, firms will be obliged to do due diligence – the preventive aspect. Second, there is a sanction component, and the possibility for a victim to file a complaint in Switzerland. The sanction has been seriously limited, however. A victim can file a complaint only if the parent company controls a subsidiary abroad and only for three violations: damage to life, damage to personal integrity, or violation of property rights. But it's a first step that will allow victims of the worst violations to be able to seek justice.
Author: Jessica Davis Pluess, Swissinfo.ch
A decision by the Swiss parliament this week on an initiative to hold companies accountable for their impacts on human rights and the environment could send a message on how far governments are willing to go...
The Initiative is part of a wider trend to embed corporate respect for human rights into hard law since the launch of the UN Guiding Principles on Business and Human Rightsexternal link in 2011...
An emerging area of national law is corporate liability and access to justice for victims, some of the most controversial pieces of the Swiss Initiative...
The shift to hard law also stems from skepticism about voluntary initiatives. “If you look at the news, there remain persistent human rights violations by companies. It isn’t working for companies to regulate themselves. What is needed is something that has teeth..." ...
Perhaps even more important is the precedent the initiative sets for other countries and the statement it makes about Switzerland’s position on protecting human rights, especially given the high concentration of multinational companies in the country.
John Ruggie's statement emphasizes importance of reaching workable compromise on Swiss Responsible Business Initiative
Author: John G. Ruggie
"Statement on Swiss Citizens‘ Initiative. John G. Ruggie, Former UN Special Representative on Business & Human Rights", 10 June 2018
...The wave of globalization that has swept through the world over the past generation demonstrates the scale mismatches and governance gaps between transnational enterprises and the capacity of societies to deal effectively with the adverse consequences those enterprises may generate. The UN Guiding Principles (UNGPs) are intended as a framework to narrow these gaps. When I delivered the UNGPs to the UN Human Rights Council in 2011, I said that building on this framework will require a smart mix of policies and regulations...We’ve done quite well on the policy front, with soft uptake of the UNGPs by states, international institutions, business enterprises, as well as civil society and workers organizations...In a growing number of instances the UNGPs have also been deepened and made more robust by the adoption of hard law. For example, the various modern day slavery acts, non-financial reporting requirements, and the French due vigilance law draw on and reference the UNGPs. Similarly, Canada has recently established the office of an ombudsperson, whose remit includes the human rights dimensions of Canadian businesses’ overseas operations...[B]y reaching a workable compromise on the Citizen’s Initiative, Switzerland would not be alone in adopting more progressive steps to address the scale mismatches and governance gaps that exist in the world economy today—and which, not coincidentally, are one of the major causes of the rise of extreme forms of populism on the political left and right alike. Other countries have already taken such steps. Safeguarding the Swiss brand is in the interest of all Swiss, be they natural or legal persons.
Full text of Swiss Parliament's counter-proposal to the responsible business initiative available in English
Author: Swiss Parliament (unofficial translation by Swiss Coalition for Corporate Justice)
[Please note that this is an unofficial translation. The original text was published May 4th 2018 in French and German.]
[D]ue diligence [...] applies to companies which, alone or together with one or more domestic or foreign companies controlled by them, exceed two of the following values in two consecutive financial years:
a. balance sheet total of 40 million Swiss francs;
b. sales of 80 million Swiss francs;
c. 500 full-time positions on an annual average.
This Article furthermore applies to companies whose activities entail a particularly high risk of violating the provisions for the protection of human rights and the environment, also abroad. It is not applicable to companies with such a risk that is particularly small...
[C]ompanies [...] are also liable for the damage caused to life and limb or property abroad by companies actually controlled by them... In particular, companies shall not be liable if they can prove that they have taken the measures required by law to protect human rights and the environment in order to prevent such damage or that they have not been able to influence the conduct of the controlled company in connection with the alleged infringements.