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A more ethical economy, but how? 11 questions and answers about the group initiative
The group initiative will be voted on on November 27. The voting campaign has already been launched. But what is it exactly? Eleven questions and answers about the referendum and the counterproposal.
Companies should be able to be held liable for their actions abroad, for example in the case of child labor (symbolic image). Image: LAIF
What does the popular initiative require?
In essence, the popular initiative “By Responsible Business: Protecting People and the Environment” seeks to ensure that companies also respect human rights and environmental protection abroad.
How should this goal be achieved?
On the one hand, companies should be required to carry out due diligence controls in relation to compliance with internationally recognized environmental and human rights standards. This obligation should apply to subsidiaries and to all business relationships, ie throughout the entire supply chain. On the other hand, a new liability rule will be introduced. Corporations are liable for damages caused by companies they control abroad. Unless they can show that they have done due diligence.
What are due diligence checks anyway?
Companies should analyze what business activities have an impact on human rights and the environment and explain what they are doing to avoid negative effects. After all, they must take it into account in the reports.
Which companies does the initiative affect?
In principle, all companies that have their headquarters or main branch in Switzerland are affected. However, the text of the initiative stipulates that the legislator must take into account the “needs of small and medium-sized companies with low risk”. In other words, Parliament would have a certain margin of discretion to implement it.
Who should companies be responsible for?
Thats the big problem. The text of the initiative says: Companies are responsible for the damage “caused by the companies they control.” This may be a legal control, but according to the initiators, “economic dependency” is also sufficient. Therefore, liability can also apply to a supplier if he works primarily for a specific Swiss company.
Aren’t companies liable for the damages today?
But. Financially dependent subsidiaries or suppliers are already liable and can be brought to justice where the damage occurred. What would be new would be that companies could also be held liable in Switzerland for the misconduct of companies controlled abroad.
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What policy has Switzerland followed so far to encourage companies to better comply with environmental and human rights standards?
The Federal Council relied in advance on voluntariness. In the 2020-2023 national action plan for the implementation of the United Nations Guiding Principles on Business and Human Rights, the Federal Council defined 35 measures, in particular for awareness-raising, training and the exchange of good practices and guidelines. There is another action plan in the field of corporate social responsibility of companies. Part of this is the National Contact Point, an informal arbitration body for violations of the OECD guidelines for good corporate governance. As part of the company law review, Parliament has also introduced new transparency provisions for the raw materials sector.
How does the group’s initiative compare internationally?
International comparisons are difficult. France, for example, already has a liability provision for corporations. However, the entire burden of proof rests with the plaintiff. You not only have to show, as in the case of the initiative, that the damage was caused by an illegal action and that there is a causal link. But also that the parent company has violated its duty of care. In France, liability also applies to suppliers. To date, the EU has only had information obligations, but the responsible commissioner is examining a tightening of the rules; It remains to be seen whether there will also be responsibility.
There is an international trend towards increased due diligence. Compared to other countries, the initiative has very broad due diligence requirements. In Germany, there has been a fight for a supply chain law for years. The government is so divided that passage of the bill has been postponed time and again.
Don’t the Federal Council and Parliament see the need to act?
Yes, but they reject the new liability rule and don’t want a “legal experiment.” It has approved an indirect counterproposal based on the regulations of the EU and other countries. The counterproposal only takes effect if the initiative is rejected.
What does the counterproposal include?
It consists of two elements. On the one hand, it assumes the information obligations of the EU. Public companies, as well as large financial institutions of a certain size, must be held accountable in the areas of the environment, social and labor affairs, human rights and corruption. Due diligence would be introduced in two areas: for conflict minerals and child labor. There is no group responsibility. If information obligations are violated, there is a risk of fines.
Who is in favor of the initiative and who is against?
120 non-governmental organizations, as well as regional and free churches are behind the initiative. They receive support from the SP, the Greens, the BDP and parts of the GLP (there is no official slogan yet) and the CVP, first of all from the Christian Social Wing. The initiative is opposed by the business associations, SVP, FDP and CVP, as well as the Federal Council.
