Swiss reject tough law on supply chain due diligence

2 December 2020

Swiss voters have rejected proposed legislation that would have seen Swiss firms such as Glencore and Nestlé liable for human rights and environmental violations in their supply chains. 

Provisional results from the divisive referendum, which took place on Sunday (29 November), showed 50.7% of voters backed the Responsible Business Initiative. However it failed to win support from a majority of cantons (Swiss states), which is necessary for a referendum in the country to pass.

Under the Responsible Business Initiative, Swiss firms could have been held liable in Swiss courts for violations committed by subsidiaries and suppliers, unless firms were able to prove proper due diligence had been carried out.

The initiative had been opposed by many firms over concerns it would make Swiss firms liable for the actions of independent suppliers. 

In a newspaper advertisement, Credit Suisse CEO Thomas Gottstein and other bank executives, warned: “Accepting this initiative would prompt Swiss companies to move to other countries, leading to the loss of valuable jobs and taxable assets in Switzerland.”

The Swiss government had also opposed the initiative and instead backed a milder counter proposal, which will automatically come into force in its place.

Under the counter proposal, firms are obliged to report on human rights and environmental standards and conduct due diligence in their overseas operations and supply chains, but it stops short of a liability clause.

Karin Keller-Sutter, justice minister, told a press conference: “The Federal Council is pleased with the result, but is also aware that many who have fought for years for the initiative are disappointed today.

She added the new government measures are a “good way to achieve the common and undisputed goal of better protecting human rights and the environment”.

A spokesperson for mining firm Glencore, which is based in Switzerland, said they welcomed the result of the poll.

They added: “The indirect counter proposal prepared by the Federal Council and parliament is internationally aligned and will effectively promote the protection of human rights and the environment with new transparency and due diligence measures.”

Conversations on the role of businesses have been taking place around the world. Under proposed legislation in Germany, firms would face fines for failing to carry out mandatory human rights due diligence.

US president-elect Joe Biden also said he would require public companies to disclose climate risks and greenhouse gas emissions in their operations and supply chains.

Meanwhile, the UK announced it is introducing mandatory due diligence reporting on deforestation for firms.

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