Switzerland votes on a law to make companies liable for Human Rights abuses

Agni Mentaki Tripodi

29 November 2020

Swiss voters are called today, Sunday 29 November 2020, to decide on a law that would make Swiss companies legally and financially liable for Human Rights violations and environmental damage. The law affects the firms’ global operations and would make them liable for all abuses that would occur anywhere in the world due to their operations.

One of the special features of Swiss political system is “Direct Democracy”, a system that allows all Swiss citizens aged 18 and over to vote in elections and referendums. The citizens are allowed to express their opinion on the decisions taken by the federal government and also to propose amendments to the Federal Constitution.

Switzerland is a small country with population a bit over 8,5 million but rich in business. Swiss multinational companies for example in pharma, mining or food industries source products and raw materials all over the world and Switzerland is a world center for commodity trading. According to the Swiss Foreign Affairs Department:

“Switzerland is a Global trading hub for oil and petroleum, metals, minerals, agricultural products, sugar, cotton, cereals and oilseed. Employs 35,000 people and generated annual revenue of 25bn Swiss Francs (£21bn; €23bn) in 2017. There are 550 commodities trading companies in Switzerland. A third of world commodities consumed worldwide are traded in Switzerland”

Corporate responsibility, the act of incorporating environmental and social concerns into a company’s planning and operations as well as the effort to improve a company’s environmental and social impact, has become a priority in the agenda for many companies. However, at the moment this is a decision that is made by a company at a voluntary level and not as a result of a legally binding instrument that requires companies to do so.

“Many companies do the right thing already, but in cases where they don’t, then under the new law, victims of a subsidiary of a Swiss company abroad could sue the Swiss parent company for damages (Andreas Missbach, campaigner in favor of the new law). This law comes to reinforce these voluntary standards allowing the victims of Human Rights violations to seek remediation by Swiss courts”.

And he continues, by highlighting cases, for example in the mining industry where

“communities are mistreated, people are put off their land, water is poisoned, and we have this with companies that are headquartered in Switzerland”.

On the other hand, those against the new law claim that putting Switzerland in a more radical path than the rest of Europe would put Swiss businesses at a disadvantage. Eric Herzog, form Swiss business federation Econimiessuisse believes that:

“it is not the right time to introduce strict, experimental new laws and he believes that “this sort of decision has to be made on an international level”.

The arguments in favor and against are many. There are governmental representatives who believe that this proposal is too radical and goes too far. They agree with the concept but disagree with the suggested implementation.

There are also representatives from the Business world that believe that this initiative will have a positive impact to their business reputation and to the reputation of Switzerland as a business hub.

There are also other representatives of small-medium businesses that have concerns on what this law would practically mean for their businesses. They claim that the way the law proposal is phrased is not clear and they are afraid that they could not meet the requirements. Also, they add that it’s more difficult for a small company to find the human and financial resources needed to comply with this law and they could not easily control the operations of big suppliers in other countries. These are all reasonable concerns that both sides need to consider.

The big day is today. Let’s see what the Swiss people will decide.

(to be continued)