Paradisiacal voluntary action

Article as analysis
Countless enterprises are all too willing to use every tiny legal loophole to maximize their profits. Voluntary action is also the mantra of the Federal Council, even if human rights are concerned.

The parliamentary elections of autumn 2015 left behind disillusionment among Swiss citizens who want an open-minded country that shows solidarity. The victory went to those political forces that favour national selfishness and short-term economic interests. Economiesuisse, Swissholdings and other lobbyists for multinational corporations were ecstatic – at last, another Parliament for which corporate interests were more important than solidarity with the less fortunate or Switzerland's humanitarian tradition.

That was some time ago. Meanwhile, there have been growing signs among the Swiss people in favour of a political turnaround. In February 2017 the Swiss electorate defeated Corporate Tax Reform III. That is a gratifying outcome also from a developmental standpoint. The reform would have created new incentives for companies to shift their profits untaxed from developing countries to Switzerland.

In a representative survey conducted in late October, 77 per cent of respondents favoured the Responsible Business Initiative. That was still before the publication of the Paradise Papers. The approval would presumably have been even more emphatic thereafter. Swiss citizens want corporations to be legally bound to respect human rights and protect the environment abroad as well.

Yet it would seem that the Federal Council has not yet recognized the signs of the times. The revised version of the corporate tax reform submitted by the Federal Council for consultation bears key resemblances to its rejected predecessor. At the UN negotiations in Geneva on binding human rights regulations for business, Switzerland was obstructive – alienating developing countries in the process. The Federal Council is opposing the Responsible Business Initiative and instead advocating self-responsibility, whereby enterprises would voluntarily respect human rights and protect the environment.

The Paradise Papers illustrate the working of the principle of voluntary action. Countless enterprises are all too willing to use every tiny legal loophole to maximize their profits. In the case of the Paradise Papers, the issue is tax avoidance rather than human rights violations or serious environmental damage. But the fierce opposition from Economiesuisse and Swissholdings to the Responsible Business Initiative is clear evidence that major corporations are having problems not only with tax ethics but also with respecting human rights.

It is all the more gratifying that the Legal Affairs Committee of the Council of States is taking the initiative seriously. It wants to incorporate key points of the initiative in a parliamentary counterproposal. Although the corresponding committee of the National Council rejected the idea, it is likely that the discussions will continue. The proponents of the initiative, including Alliance Sud, have signalled their interest in a counterproposal. They are open to dialogue about a law that would introduce decisive improvements on the status quo. Comprehensive due diligence in human rights and environment protection cannot be a matter of free will for corporations. Human rights violations must have clear legal consequences.