How will we judge multinationals when the epidemic is over?

Employees at the greatest risk are those who don't have the luxury to work from home. Keystone / Matteo Bazzi

Our regular analysis of what the biggest global companies in Switzerland are up to. This week: responsible business in an epidemic, child labour on coffee farms, and Responsible Business debate.

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What has made multinational companies in Switzerland so successful is exactly what is making them particularly vulnerable in a global epidemic.

This content was published on March 11, 2020 - 18:30

In the Financial Times last week, Ian Goldin, author of the Butterfly DefectExternal link, wrote that “The super-spreaders of the goods of globalisation are also super-spreaders of the bads.”

This pretty much sums up Switzerland, which has one of the highest per capita infection rates of the novel coronavirus. It is also one of the top ten countries exposed to Chinese supply disruptions as a result of the outbreak, having lost out on some $1 billion in exports in February.

Sizing up the full economic fallout could take a while, but the people hardest hit will not be the CEOs. They are those who sew together the surgical masksExternal link, clean hospital beds, and stock supermarket shelves. It is those who don’t have the luxury to work from home and who don’t have a steady salary or savings to lean on when companies cut back.

While Switzerland can afford to cushion the blow for workers inside the country, how multinational companies respond to the crisis beyond desk jobs at their headquarters in Baar or Basel will determine how well they rebound and are ultimately judged by the public when this is all over.

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This also pertains to the pharmaceutical industry, which accounts for a third of Swiss exports, and has so far been fairly quiet on R&D plans on Covid-19. Many big companies have abandoned emerging infectious diseases and instead opted for more lucrative areas like oncology and rare diseases. Was this the right move?

How do you think global companies should be responding to the Covid-19 outbreak? How has it impacted your work? Drop me a line.

In other news:

Yes, there is other news.

The Swiss parliament batted around a counter proposalExternal link to the Responsible Business Initiative this week, ultimately coming up empty handed. The ball goes back in the Senate’s court, dragging out more than two years of debate.

In an interview in the NZZ, Swiss law professor and OECD lead for responsible business conduct Christine Kaufmann said current Swiss law needs an update and legal liability should be a partExternal link of it but that the popular initiative goes too far. She argued that a company will never be able to identify all violations, from the smallest sub-suppliers in the entire supply chain.

Parliament also stoked the fire of campaigners of the initiative by voting in favour of letting companies deduct fines imposed abroad from their Swiss tax bill. Although it added some due diligence language, the compromise isn’t exactly the disincentive to exploit in far away lands that some left-wing parties were hoping for. One parliamentarian went so far as to say that this amounts to “tax subsidies” for companies that act illegally.

Nespresso and its celebrity brand ambassador George Clooney were in the spotlight (and not the Hollywood red carpet kind) last week after children were found working on coffee farms in Guatemala, that allegedly supply to Nestlé-owned coffee giant Nespresso. The company stopped all purchases from the region while it investigates. Clooney’s response? “Surprised and saddened” by the news. What else?

Chocolate companies are feeling unsettled on many fronts. Lindt & Spruengli says that we may be paying more for their chocolate bars very soon to cover the being demanded by Ivory Coast and Ghana. The demand is an attempt to raise the pay for farmers that are trying to cope with a crop that has been hard hitExternal link by weatherExternal link and pests. Whether it will achieve its intended aims is still unclear. In the meantime, the Ghanaian President paid a visit to the capital Bern, the third visit by a head of state from sub-Saharan Africa. Good chances chocolate was on the menu.

Thanks for reading.

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