YES to responsible corporations

Résumé
What happens when multinational corporations from Switzerland abuse human rights and damage the environment in the South? Often nothing at all. The Responsible Business Initiative aims to change that.

No country has more multinational corporations per capita than Switzerland. Many companies with their head office in this country have repeatedly been found to be in breach of human rights or environmental standards in countries in the South. Glencore expels farmers who are fighting with stones to defend their land rights, Lafarge Holcim does not care about trade union rights, and Swiss refineries smelt gold that comes from the most dubious of sources. Yet corporate head offices in Switzerland are not legally liable for the business practices of their subsidiaries or of other firms under their control.

Whereas at the international level Switzerland champions the advancement of human rights and environmental standards, at home it opposes legislative measures to regulate corporations. Instead, the Federal Council favours voluntary initiatives by corporations.

Background to the popular initiative

Initiated by a handful of organizations – including Alliance Sud – and supported by some 50 non-governmental organizations and trade unions, the “Corporate Justice” campaign was launched in November 2011. By mid-2012, 135,000 people had signed a petition calling on the Federal Council and Parliament to prepare a law under which enterprises with head offices in Switzerland would be required to respect human rights and environmental standards worldwide. Human rights and environmental due diligence should be introduced into Swiss law, requiring enterprises to observe human rights and environmental standards, being also applicable to their subsidiaries operating around the world (prevention). In addition, stumbling blocks preventing victims from claiming damages in Switzerland (access to remedy) should be eliminated.

Ruggie strategy for Switzerland

In parallel to the submission of the petition, five Deputies submitted parliamentary procedural requests, including a postulate (12.3503) in June 2012 urging the Federal Council to formulate a Ruggie strategy for Switzerland, in other words, to table a National Action Plan for the implementation of the UN Guiding Principles on Business and Human Rights as unanimously adopted by the UN Human Rights Council in June 2011. On 14 December 2012 the postulate was narrowly approved by the National Council, yet it took until December 2016 for the National Action Plan for Business and Human Rights (NAP) to be published. The Federal Council's NAP contained no new and legally binding measures; instead it reiterated that ensuring the observance of human rights and environmental standards should fall under the corporate social responsibility (CSR) activities of companies.

On 11 March 2015 the “Corporate Justice” coalition came close to scoring an important partial victory. After a tumultuous debate, the National Council decided, with a wafer-thin majority thanks to the President's casting vote, to support a motion by its Foreign Policy Committee and call for a draft law on mandatory due diligence. A second vote was held after a proposal for reconsideration by the CVP (Christian People’s Party). Several deputies changed their positions or abstained from voting.

Launch of a popular initiative
After this manoeuvre by the National Council, over 60 NGOs decided to launch the Responsible Business Initiative. As with the “Corporate Justice” campaign, where Alliance Sud coordinated the parliamentary lobbying, the organization also played a pivotal role in the launch of this initiative. The Director of Alliance Sud is a member of the Initiative Committee and of the managing committee of the association newly founded to coordinate the initiative. On 10 October 2016 the popular initiative in favour of corporate social responsibility for protecting human rights and the environment was submitted with over 120,000 valid signatures. On 11 January 2017 the Federal Council recommended that the Parliament should reject the popular initiative without a counter-proposal. In its dispatch on the initiative dated 15 September 2017, the Federal Council indeed acknowledged that the concerns of the initiators were legitimate, yet justified its rejection by asserting that the initiative went much too far with regard to the rules of accountability.

National Council wants counter-proposal, Council of States opposes it

Unlike the Government, the Legal Affairs Committees of the Council of States (on 14 November 2017) and the National Council (20 April 2018) came out clearly in favour of the formulation of a counter-proposal. On 14 June 2018 the National Council supported its Committee and approved a draft law as an indirect counter-proposal to the initiative. In response, the Initiative Committee raised the prospect of withdrawing the popular referendum if the proposal were not watered down in the Council of States. By cutting out the roundabout route of constitutional amendment by popular initiative, legislative provisions could take effect much more quickly, and this was in the interests of victims of human rights abuses.

Thanks to the lobbying of economiesuisse and Swissholdings, a narrow majority (22:20) of the Council of States won against a counter-proposal. On 13 June 2019, the National Council confirmed by 109 votes to 69 (7 abstentions) that it wanted an indirect counter-proposal to the initiative. The business will thus go back to the Council of States, whose Legal Commission will deal with it again beforehand.

However, the probability that the initiative will be put to the vote in February 2020 has increased considerably. The vote would take place in the spring of 2020 at the earliest. Meanwhile, over 100 NGOs from all realms of civil society (human rights, nature conservation, consumer protection and development organizations, church circles and trade unions) have already thrown their support behind the popular initiative. Surveys indicate that the initiative has good chances of garnering the support of a majority of Swiss voters at the polls.

Protracted process

The fight for the legislative regulation of corporate social responsibility has given rise to a series of political procedural requests and reports, the most important of which are listed below.

  • On 13 March 2013, the National Council tabled a postulate (Po. 12.3980) calling on the Federal Council for a “Comparative report on due diligence with respect to human rights and the environment in connection with the foreign activities of Swiss corporations”. Mandatory due diligence is central to the UN Guiding Principles. It provides that companies should identify human rights risks, take remedial action and report transparently on the matter.
  • The Comparative Report was published on 28 May 2014. In it the Federal Council acknowledged the need for action and that mandatory due diligence could become enshrined in law. It also recognized that Switzerland bears major responsibility for the observance of human rights and environmental protection, especially in countries where the rule of law is deficient.”
  • As a consequence of the comparative report, the Foreign Policy Committee of the National Council approved a motion on 20 September 2014 (14.3671) calling for a draft law on mandatory due diligence. This motion was rejected in a memorable debate in the National Council, whereupon the popular initiative was launched (see above).
  • As pertains to the aspect of reparation of the “Corporate Justice” petition, on 26 November 2014 the Council of States supported a postulate (14.3663), which called for a comparative report on access to remedy for victims of human rights abuses by companies. The Federal Council was tasked with studying how the third pillar of the UN Guiding Principles (access to remedy) could be reflected in Swiss legislation.
  • On 14 September 2018 the Federal Council tabled a Report on access to remedy. The sponsors of the petition found it disappointing. In unspecific terms, the Federal Council puts forward the further development of the National Contact Point (NCP) for the implementation of the OECD Guidelines for Multinational Enterprises as the panacea. Alliance Sud and other NGOs had previously criticized the inadequacy of the Swiss NCP (“The limits of dialogue“).
  • On 14 December 2018 the Federal Council outlined the way in which Switzerland is implementing the National Action Plan for Business and Human Rights. Although even a study commissioned by the Federal Council itself concludes that the measures introduced since December 2016 for the implementation of the NAP have had little or no impact on enterprises, the Federal Council insisted on its position that the observance of human rights and environmental standards should be a voluntary matter.