Alliance Sud News: You describe the way the relationship between Nestlé and NGOs has evolved over recent decades. Today, in addition to confrontation, there is ad hoc cooperation. Isn't this causing some confusion on the part of NGOs?
Markus Mugglin: This is not at all my impression. NGOs have learned that disagreement and dialogue are not mutually exclusive. There was a learning curve for both NGOs and enterprises until simultaneous cooperation and confrontation became possible. I have followed this process through the example of child labour in cocoa fields, which in my view is a good illustration. NGOs in the USA began pressuring Nestlé in 2001. The corporation promised improvements, but was halting in its action. A turning point came in 2012 with an admission made in a film, in which a Nestlé representative commended a Danish filmmaker for his highly critical report on the situation in West Africa's cocoa fields. Some headway has since been made in combating child labour.
Among Swiss corporations, Novartis had for many years played a leading role in the discussion on corporate social responsibility, through its foundation headed by Klaus M. Leisinger…
Leisinger was able to reach out beyond Novartis and make a difference in the Swiss debate on business and human rights. But one is now struck by the fact that Novartis annual reports make no mention of human rights. "Sustainability" is discussed without any reference at all to human rights.
Doesn't the example show up the tenuous basis of the arguments being wielded by corporations to convince us of the sufficiency of their corporate social responsibility (CSR)?
CSR is a very flexible and somewhat unreliable concept. Even leading management theoreticians now affirm this. It allows enterprises to take seriously those postulates that are easier to fulfil. When human rights are placed front and centre, this becomes less possible. Proof must then be provided that human rights are being respected and protected and that there are instruments in place to provide compensation for any human rights abuses. These are the demands of the UN Guiding Principles. Admittedly, they are also not legally binding. But they do reduce the scope for picking and choosing, which enterprises like so much about the UN Global Compact.
Last year the Swiss Government presented a report on CSR. You could hardly find anything positive about it?
The report made for frustrating reading. It is confusing and has no red line, no recognizable message. Banking professor Urs Birchler hit the nail on the head when he stated in the Neue Zürcher Zeitung [an economically liberal oriented Swiss daily newspaper]: "The Confederation participated in the debate not as a State, which lays down and implements clear and binding rules, but as the originator of vague expectations." The State should create clarity rather than spawn confusion through a complex number of recommendations. It should implement precise and unbureaucratic regulations for the protection and observance of human rights by enterprises.
The banks had to learn the hard way that dirty dealings carry high risks, mostly to reputation. How much importance do corporations ascribe to reputation?
I was surprised by the clarity of a statement contained in a UBS annual report regarding the difficulty of recovering from reputational damage. The recovery process was slow and the offences of recent years had seriously damaged the bank's image and financial performance. Corporations seem to realize the true value of reputation.
Banks do talk a lot today about sustainable finance, yet the figures tell a different story.
This is confirmed in their annual reports. The amounts being reported by the two major banks as "sustainably managed assets" have indeed increased appreciably in recent years. It can be gleaned from the annual reports, however, that only a very small portion of these assets are invested in keeping with social and environmental criteria.
Reputational damage also affects countries where corporations maintain their head offices. With respect to gold, the State Secretariat for the Economy (Seco) is attempting to take countermeasures through the "Better Gold Initiative". It covers 700 kg, whereas 3,000 tonnes of gold, or 70% of the worldwide trade, passes through Switzerland. This is almost a ridiculously small step, isn't it?
This difference is indeed striking, and all the more so when it is considered that for decades, Switzerland deliberately kept its role in the gold market a secret. Even today, the origin of the huge amount of gold being processed and traded in Switzerland is highly reminiscent of a black box. Traceability, in other words the question of where Swiss gold comes from and the conditions under which it has been mined, is still rather scant. And yet the Better Gold Initiative shows that certification is only worth as much as the degree of transparency involved.
How do you account for the marked reticence on the part of the Federal Administration when it comes to human rights issues?
My impression is that there is a very widespread kind of "political correctness". I also got this impression during the debate on food speculation. There is an apparent reluctance to get to know the true facts. There are taboo areas such as business and human rights, which some do not discuss openly. Besides, there is a leaning toward subsequent enactment. Switzerland waits until the others – mostly the European Union – have laid out their policy. The hope is perhaps not to have to take part in certain discussions regarding economy and society.
Enterprises can hire armies of lobbyists to influence the process regarding the way firms should behave with respect to human rights. With their limited resources, do NGOs stand a chance against them?
Absolutely. I cannot help recalling the debate on tax justice. It was triggered in 2003 by a handful of experts who founded the Tax Justice Network. Today, their proposals have reached the highest levels of the OECD. There is much professional expertise in the world of NGOs. I am thinking, for example, of Banktrack or Somo in the Netherlands, of Oxfam or numerous Swiss NGOs. I am more concerned as to whether civil society will succeed in disseminating all this research to the general public. Naturally, the media should also play a part in publicizing it, but that is another story, which I have not tackled owing to time constraints.
Markus Mugglin, many thanks for talking with us.
Markus Mugglin was interviewed by Allliance Sud staff members Daniel Hitzig and Laurent Matile.