What does Switzerland's vote on mandatory due diligence mean - and what happens next?

19/6/19 - Urs Rybi, Public Eye

Urs Rybi provides context on last week's Swiss vote on mandatory human rights due diligence.

This blog is part of a series 'Towards Mandatory Human Rights Due Diligence'.

On Wednesday, Switzerland’s National Council took an important step towards introducing mandatory human rights checks for all large Swiss companies.

In 2016 a broad coalition filed the Responsible Business Initiative (RBI). This citizen’s initiative would trigger a binding vote on a constitutional amendment to introduce mandatory due diligence into human rights and the environment for Swiss companies.

Under the Swiss system, government or parliament can try to persuade initiators to withdraw an initiative by suggesting a counter-proposal. It is in this context that the Swiss parliament has tried to get a grip on the issue of corporate accountability since autumn 2017.

In June 2018 the National Council (lower house) adopted by 121 votes to 73 a concrete bill at the statutory level that introduces mandatory due diligence and clarifies the conditions where parent company liability arises.

Along with constructive parts of business, the Swiss Coalition for Corporate Justice (SCCJ) has publicly declared its willingness to accept this compromise. For the bill to be finally adopted, the Council of States (upper house) would need to agree. But it narrowly refused to discuss the bill in March, by 22 votes to 20.

Last week, on June 13th, it was up to the National Council to either abandon the idea of a counter-proposal or to stick to its bill. While some of the largest business associations in Switzerland fiercely oppose any regulation and saw an opportunity to kill the bill, it became more obvious than ever in recent weeks that business is split on this question.

The five major business associations from the French-speaking part of Switzerland - including the Groupement des Entreprises Multinationales GEM (representing 90 multinational companies in Switzerland) - have joined forces with the business association of the major Swiss retailers MIGROS and COOP to advocate in favour of the bill.

Additional companies like the leading Swiss key manufacturer Dormakaba suddenly raised their voice on the eve of the decision. A group of institutional investors weighed in on behalf of the counter-proposal as well.

On June 13th, after five hours of debate around recent scandals and the need for more ethics in business, the National Council overwhelmingly voted to stick to its bill by 109 votes to 69. Shortly afterwards, the conference of the ministers of economic affairs in the 26 Swiss cantons - a real heavyweight in Swiss politics - decided to support the counter-proposal.

It is now up to the Council of States in September to either revise its decision and enter into discussion of the bill, or to end the parliamentary process and to allow a popular vote in early 2020. Either way, public support for the issue is soaring, with over 200 local volunteer committees established in just half a year across the country, a fair-trade company crowdfunding more than €240,000 in the last four weeks, and several liberal and conservative politicians joining the campaign.

Urs Rybi is Policy Analyst, Commodity Trading & Corporate Accountability, at Public Eye