A Step Back for Corporate Accountability in Switzerland?

Originally posted: 4th December 2020

Last Sunday, Swiss voters rejected a proposal that would have made multinationals based in the country liable for human rights and environmental violations. The provisional results for the proposal, known as the Responsible Business Initiative (RBI), were positive, with over 50% of voters in support. Despite this, the proposal did not receive the support of the majority of Swiss states necessary for any referendum to be passed.

What are the problems motivating the proposal?

While only having a population of around 8.5 million, Switzerland is home to some of the largest multinational companies in the world, notably food company Nestlé and commodity company Glencore. Switzerland is a global trading hub for oil and petroleum, metals, minerals, agricultural products, sugar, cotton, cereals and oilseed; a third of all commodities consumed worldwide are traded by companies based in Switzerland.

The business activities of such companies often have a global reach; the extractive industry is the main area of concern. Many Swiss-based companies rely on mines in Latin America, where there have been allegations of serious harm caused. Campaigner Andreas Missbach states: “Communities are mistreated, people are put off their land, water poisoned, and we have this with companies that are headquartered in Switzerland." Concerns of water pollution and labour abuses in the Democratic Republic of Congo have also been raised in relation to Glencore.

While a lot of companies either do or claim to, engage in corporate responsibility, there are no laws in Switzerland which require multinational companies to conduct human rights and environmental due diligence. As such, companies such as Glencore cannot be held responsible under the law for their misconduct.

What does the proposal entail?

The RBI mandates multinational companies to conduct human rights and environmental due diligence, ensuring they do not negatively impact either. Multinationals would also be liable for any harm they or their subsidiaries cause, unless they are able to prove that they took all due care to avoid the harm.

How has the proposal been received? The RBI has split public opinion in Switzerland. Despite some support, it appears the majority of prominent business leaders in Switzerland are against the proposal. Erich Herzog of Swiss business federation Economiesuisse believes the RBI “would put Swiss companies already weakened by the pandemic in great difficulties” , while Karin Keller-Sutter, the Swiss Justice Minister, believes “It wouldn't go down well for our neutral country, which also plays a mediating role, to decide to impose its courts abroad”. Certain Swiss banks and businesses even took out expensive newspaper ads warning against the consequences of the RBI.

Despite this, there is evidence of real progress. In a country where voters are traditionally cautious about money, the RBI managed to receive support from all different sectors of Swiss society: left and right, urban and rural. Such a knife edge vote in a country that resisted attempts to crack down on money laundering for years is also indicative of shifting attitudes towards the role of corporate accountability.

While the RBI may have been rejected this time around, such progress must be encouraged and similar initiatives developed. Economic stability cannot be prioritised over the significant human rights and environmental damage carried out by Swiss based multinationals. All companies must have clear rules and accountability mechanisms for dealing with such abuses, and these rules and mechanisms must be backed up legislation so that corporate accountability is more than an empty promise.