Swiss responsible business initiative wins a majority, but will not be implemented

A milder counter-proposal will automatically come into force.

Responsible business initiative rejected at the ballot box

Ten years in the making, a proposal to hold Swiss companies accountable for their actions abroad has failed to win a majority in a nationwide vote on Sunday.

Jessica Davis Plüss

https://www.swissinfo.ch/eng/business/swiss-to-vote-on-holding-companies-accountable-for-supply-chain-abuses/46184500

November 29, 2020

The cantonal vote sealed the fate of the initiative launched by a broad alliance of NGOs. The majority of Switzerland's 26 cantons rejected the initiative. However, the initiative succeeded in capturing 50.7% of the popular vote.

A majority of both the popular vote and cantonal vote is needed for an initiative to pass.

It is very rare that an initiative is rejected by cantons but successfully achieves a popular majority.

Cantons notably in the German-speaking part of the country, refused the proposal for a constitutional amendment to impose new standards on Swiss companies' activities abroad. But most cantons in the French and Italian-speaking parts of Switzerland as well as urban regions voted in favour.

In a news conference announcing the results, Justice Minister Karin Keller-Sutter said "the Federal Council [the cabinet] is convinced that the chosen path is the right one". The rejection of the initiative means a milder counter-proposal will automatically come into force.

It obliges companies to report on human rights and environmental standards and conduct due diligence when it comes to child labour and mineral sourcing from conflict areas. However, it doesn't include a liability clause as was the case with the initiative.

Dick Marty, a renowned human rights expert and former politician who co-chaired the initiative committee, said on Sunday that "if victory doesn't come today, it will certainly come tomorrow", implying that the movement built around the initiative will not end now.

He repeatedly warned that with the initiative rejection Switzerland risks "once again being behind, as was the case with money laundering or banking secrecy". Several countries and the European Union have put in place or are considering laws that go beyond the Swiss counter-proposal. https://www.parlament.ch/centers/eparl/curia/2016/20160077/Texte%20pour%20le%20vote%20final%202%20NS%20F.pdf

Criminal law professor Mark Pieth told swissinfo.ch that Switzerland missed the chance to equalise with other countries by rejecting the initiative. However, he sees a wider trend in courts in the UK and other countries to hold subsidiaries of international companies liable for abuses abroad. This could also affect Swiss companies.

Under the Responsible Business Initiative, Swiss-based firms would have had to prove they had taken due care to prevent abusive labour conditions and environmental damage in their own operations and supply chains abroad. If they failed to do so, individuals or organisations could sue companies for abuses.

The fact that the initiative had so much backing among the Swiss people should not be seen as a loss of confidence in the Swiss economy, said Christoph Mäder from the business lobby organisation economiesuisse, which opposed the initiative. He told Keystone-SDA that "we have always emphasised that this is about a couple of cases" or bad examples.

However, Florian Wettstein, a business ethics professor at the University of St Gallen, told swissinfo.ch that the vote makes it clear that the Swiss people want companies to do more than just report on issues. "This should send a clear message to companies that they need to get their act together. It also sends a message to our politicians to really take the issues seriously and be open to stronger measures.”

He said that despite the initiative's rejection, there are avenues in existing Swiss law that haven't been fully exploited to hold companies accountable.

Shared goal, wrong way

Opponents of the initiative, which include most large multinationals, major industry lobby associations as well as the government and a majority of parliament, said that they were aligned with the basic vision and goals of the initiative but disagreed on how to get there. They argued that holding companies legally liable in Swiss courts for abuses abroad was too far-reaching.

Some company executives from Novartis, Nestlé and LafargeHolcim had said that they feared a flood of lawsuits for actions of suppliers beyond their control, if the initiative was accepted. Backers of the initiative, however, said that companies can’t be counted on to regulate themselves and that legal liability ensures that victims of corporate abuse receive access to justice.

The emotionally charged campaign intensified in the last few weeks ahead of the vote. It was said to be one of the most expensive voting campaigns in Swiss history.

The committee behind the initiative built a grassroots movement of supporters across the country equipped with orange flags, postcards and billboards to convince voters.

Swiss commodity and mining giant Glencore, agribusiness company Syngenta and cement producer LafargeHolcim were popular targets of the campaign. Some pushed back, taking out full-page advertisements in local papers or publishing promoted Twitter posts defending their records on the environment and human rights.

A long road

The initiative was launched by an alliance of NGOs more than five years ago and is supported by church groups, human rights groups, trade unions and political parties mainly from the left. It is the latest stage in a ten-year campaign by civil society organisations for ethical business activities.

The United Nations adopted principles on business and human rights in 2011 which Switzerland implemented in a national action plan five years later based on the international guidelines. However, they do not include binding measures for companies.

The Swiss parliament has gone through several debates and iterations of the initiative. The last counter-proposal put forward by parliament didn’t go far enough to satisfy the initiative backers, who decided to let the Swiss voters have the final say.

The Responsible Business Initiative’s orange revolution

Backers of the responsible business vote have been highly visual in spreading their message with flags, fliers and promotional materials. Is it a new way of doing direct democracy or mere colour?

Domhnall O'Sullivan

https://www.swissinfo.ch/eng/the-responsible-business-initiative-s-orange-revolution/46150866

November 13, 2020

A visitor to Switzerland these days might be struck by a sense of orangeness. In towns and cities, orange flags hang from balconies and railings, triangular orange fliers are tied onto bicycle frames, orange stickers are taped onto backpacks. Even in the countryside, farmhouses and sheds carry big orange banners with the slogan “Konzernverantwortungsinitiative JA!” [Responsible Business Initiative YES!].

The initiative, which comes to vote on November 29, aims to make Swiss-based companies liable for rights abuses in their global supply chains. The flags especially are the visual centrepieces of a campaign which has taken the country by surprise, adding splashes of colour to neighbourhoods and making the people’s initiative one of the most visible of recent years. Government and parliament both oppose the idea, but latest polls suggest it could win.

Direct correlation is hard to measure. Rahel Ruch of the organising committee says 80,000 of the flags had been sent out by early November to “all parts of the country”, both rural and urban; for context, turnout in Swiss votes is usually around 2 million. With each unit costing CHF10 ($10.95) to produce and send out – they are free for people to order – it’s a fairly cheap way of achieving wide publicity.

Their concrete impact is less clear. Some say the flags are mostly hung in neighbourhoods that are already likely to support such initiatives anyway. “Strangely, this territorial flag-displaying happens in areas where there’s nothing to be gained,” wrote one author in the Tages-Anzeiger newspaper recently. In a kind of real-world version of online echo-chambers, the flags might just highlight one’s “belonging” to a certain group or place, rather than change anybody else’s mind, the argument goes.

Mark Balsiger, a political campaign specialist, agrees that more flags doesn’t necessarily mean more votes. They are a colourful “reminder” rather than a means of persuasion, he says. However, the length of time the flags have been visible – two or three years already, much longer than the usual couple of months in the lead up to a vote – means the initiative is firmly implanted in the public’s mind. This could help mobilise supporters to cast their ballot in the coming weeks. With the battle set to be tight, “turnout is crucial”, says Balsiger.

Martin Kuenzi of the Enigma communications firm also says mere visibility is not enough, and that the second plank of any strategy is spurring people to actually vote. But he says the flags have done a fantastic job both of creating awareness and of building up a community of “fans”. This community is currently being contacted heavily by the campaign organisers, who will be giving them a last push to vote, Kuenzi says. He’s convinced the initiative will win.

Community politics

Regardless of the result, the flags seem to mark a new way of promoting an initiative: one in which supporters become campaigners, forming a vocal community around an issue. Such campaigns involve “energising a core of potential voters who have already made up their minds, so that they vote with added emotional vehemence,” as analyst Claude Longchamp wrote for swissinfo.ch in 2018.

Longchamp says the flag trend started a few years ago with the Young Socialists, who used banners to compensate the fact that they hadn’t enough money to run traditional campaigns. Today it’s spreading, and a visitor to Bern or Zurich will see hanging from balconies the stripes of the “Glacier Initiative”, a proposal to reduce Switzerland’s net carbon emissions to zero by 2050. The campaign for paternity leave also used a flag, as does an initiative to protect drinking water quality.

“It gives us visibility that we don’t have to pay for”, says Sophie Fürst, head of the Glacier Initiative campaign team. Among various promotional articles offered on this initiative’s website are T-shirts, buttons, stickers and of course the flag, made up of blue-yellow-orange stripes framing a white Alpine vista (see below). “We wanted a positively coloured flag that people could take pleasure in hanging,” Fürst says. So far, they’ve sent out around 18,000.

A new wave?

Taken at the extreme, the image of all initiatives and referendums posting out flags in future is an absurd one. Dozens of initiatives are launched each year in Switzerland; if each did it to the extent of the responsible business campaign, this would mean millions of issue-based banners strung up around the country.

Marketer Martin Kuenzi reckons it doesn’t work for all topics anyway. It works for issues that “make people proud”, he says – issues which they feel good about showing off. For an initiative, the goal is to build a movement of “ambassadors” which spreads the word on your behalf. People have to buy into it as a community, he says; don’t expect avid supporters of tax reform to start waving flags around.

Whether it could lead to polarisation or neighbourhood divisions is a bigger and vaguer question. So far, the responsible business debate has been a civil one, even if the proponents have been criticised for using doctored, and emotive, images on their vote posters (see below). But studies have suggested that flags and symbols, while acting as a way to bring people together, can also create in-group out-group tensions. You don’t have to look far to see the tensions linked to national flags, for example.

In Bern, at least, in an apartment building in the Länggasse district known to this journalist, low-level flag wars started earlier this spring. First, a painted sheet was hung from a balcony demanding that disadvantaged groups were not left out of efforts to curb the coronavirus. In summer, as attention turned to upcoming votes, one apartment then flagged its opposition to buying new fighter jets; a downstairs neighbour responded with a patriotic-looking Swiss standard. In the end, it all led to an old-fashioned administrative intervention: a letter from the landlord, informing residents that flags were no longer to adorn the facade. Political views have since moved back indoors.

Corporate responsibility divides business and civil society

A broad alliance of civil society groups is seeking to establish new rules for Swiss-based companies doing business abroad. Voters decide on their initiative on November 29.

https://www.swissinfo.ch/eng/corporate-responsibility-divides-business-and-civil-society/46111034

November 5, 2020

It represents the culmination of over ten years of campaigning for human rights and environmental protection by Swiss non-governmental organisations, which are supported mainly by the political left.

The vote is seen as potentially harmful for Swiss multinationals and the country’s economy, as it puts a spotlight on ethical business standards and allegedly improper practices.

Similar issues are being raised in a proposed investment ban on arms manufacturing firms, which also comes to a nationwide vote in Switzerland on November 29.

The so-called ‘responsible business’ initiative specifically wants to make Swiss companies accountable for their business activities abroad that threaten human rights and the environment.

Rights violations, including abusive child labour or toxic emissions harmful for the environment, could be reasons for legal action.

As part of their due diligence obligations, Swiss companies must review all their business activities to identify potential risks to people and the environment. Firms must take effective measures to combat negative impacts and have to report regularly on what has been implemented.

One of the main sticking points of the initiative is to what extent Swiss-based firms can be made liable for damages caused by their practices.

There is disagreement notably over whether all Swiss small- and medium-sized companies would fall under the same legislation as multinationals headquartered in Switzerland.

Another open question is how the proposed law will be implemented by companies abroad which are under the control of – but not owned by – a Swiss-based firm. Equally controversial is the so-called reversal of evidence. This is the principle whereby a firm accused of a rights violation has to credibly prove they have taken adequate steps to be exempted from liability.

Experts say these points might well end up at the centre of future political debates in Switzerland if the initiative passes at the ballot box, as it would be up to parliament to hammer out detailed legislation to implement the initiative.

Parliament has already approved a watered-down legal amendment on corporate responsibility if the initiative is rejected.

Supporters say numerous cases of corporate injustice abroad – ranging from catastrophic working conditions to failure to protect the environment – by Swiss-based firms, particularly in the commodities sector, make action inevitable.

They say Swiss companies have a moral obligation to adhere to principles on business and human rights adopted by the United Nations in 2011.

Non-binding agreements and national awareness campaigns are not sufficient, the initiative campaigners argue.

They reject allegations that Switzerland’s small and medium-sized businesses – the backbone of the Swiss economy - would be hard hit by new accountability rules.

For their part, opponents say the initiative makes extreme demands and weakens the competitive edge of Swiss companies at a time when the economy is being hit hard by the Covid-19 crisis.

They have warned of possible job losses in Switzerland as multinationals might decide to give up their headquarters to move elsewhere amid concerns about a wave of legal disputes.

They also argue that support for the initiative would prompt companies to reduce investment in the infrastructure of emerging economies and development countries where they do business.

A parliamentary counter-proposal, which excludes liability, would be a practical alternative option to improve environmental protection and combat human rights abuses, according to opponents.

In 2016, the campaigners handed in over 120,000 signatures collected within 18 months to force a nationwide vote on the issue.

The people’s initiative came in the wake of a non-binding petition by a coalition of NGOs four years earlier which called on the Swiss authorities to ensure Swiss-based firms respect human rights and environmental standards in their business practices worldwide.

But neither the petition to the Swiss authorities nor proposals launched in parliament had much of an impact, according to the NGOs.

Drawn-out procedures in parliament, including efforts to draft alternative options, took until 2019 before a date for a nationwide vote was set.

It will take both a majority of voters and the country’s 26 cantons for the initiative to pass at the ballot box on November 29.

Under the Swiss system of direct democracy, voters’ approval of a people’s initiative leads to a change in the country’s constitution, prompting a series of legal amendments to be decided by parliament at a later stage.

Launched by a group of 60 civil society organisations, the initiative typically pits the political left against the right, including the business community.

The political centre is divided, with several parties or prominent members siding with the initiative supporters.

The business community is not united either. There have been disagreements between the Swiss Business Federation (economiesuisse), which represents large companies, and other associations.

The civil society involvement in the campaign ranges from rights groups, women’s associations, trade unions and church communities.

Both the government and parliament recommend voters reject the initiative.

If voters approve the proposal, Switzerland will have the strictest liability rules compared with other countries, the government says.

However, supporters say the initiative would allow Switzerland to join a group of other European countries with similar legislation.

France, Italy and Britain have introduced laws about corporate responsibility and liability. Other countries are planning such steps. Efforts are underway in the European Union to streamline regulations next year.

The issue of corporate responsibility has been in the news for more than a decade in Switzerland and the vote on November 29 is seen as crucial for Switzerland’s business community.

Political scientists have compared the corporate responsibility initiative with previous attempts to rein in perceived business excesses, notably the successful initiative on executive pay in 2013.

The campaigners chose to target and involve interest groups, including academics and centrist politicians and entrepreneurs, from an early stage.

An alliance of more than 130 groups from civil society have come out in favour of the initiative. The activities of representatives of the country’s main two churches, Roman Catholics and Protestants, are unusual in Swiss politics.

Flags outside private homes showing support for the initiative give the campaign an unusual visibility.

Reports say opponents are investing about CHF8 million ($8.8 million) to fight the initiative, but exact figures are not available as there is no transparency about political funding in Switzerland. Initiative campaigners say they don’t have a major sponsor but the support of volunteers and thousands of small contributors.