Responsible business initiative rejected at the ballot box

The aim of the Responsible Business Initiative is to ensure that companies uphold human rights and environmental standards in their operations and throughout their supply chains. Kadir Van Lohuizen / Noor

Ten years in the making, a proposal to hold Swiss companies accountable for their actions abroad was rejected in a nationwide vote on Sunday despite it winning majority popular support.

This content was published on November 29, 2020 - 17:52

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.

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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-proposalExternal link 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.

A joint statement from the business lobby groups economiesuisse, Swissmem, Swiss Holdings and Science Industries Switzerland welcomed the result of the vote.

"By rejecting the vote, Switzerland has spoken out against the over-regulation of our companies and in favour of a competitive business location."

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.

Criminal law professor Mark Pieth told 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 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 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 rightsExternal link in 2011 which Switzerland implemented in a national action planExternal link 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.

Results votes November 29, 2020

Corporate responsibility:          50.7% yes      49.3% no, but no majority of cantons

Ban on arms investment:         42.5% yes      57.5% no

Turnout: 47%

About 5.5 million Swiss citizens, including registered expat Swiss, were eligible to take part in the votes.

There were also numerous ballots at cantonal and local levels on November 29.

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