A Swiss referendum for mandatory environmental and human rights due diligence legislation

This week the Swiss legislature debated two counter-proposals to the Responsible Business Initiative (RBI) which seeks to compel human rights due diligence, and voted in favor of the less stringent second proposal which does not entail civil liability. The RBI will therefore go to referendum in late 2020.

A bit of background:

• In 2016, the Swiss Responsible Business Initiative (RBI) introduced a proposal to introduce mandatory human rights diligence legislation, including direct liability of businesses for breaches of human rights and environment standards.
• The RBI proposal would require companies headquartered or registered in Switzerland to conduct human rights and environment due diligence in their operations as well as in their supply chains and with subcontractors. The proposal also would introduce direct liability of companies for human rights violations and reverses the burden of proof (i.e. companies would establish that they took adequate care to prevent and address human rights and environmental violations).
• In line with Swiss law, the Swiss parliament was given the opportunity to prepare two counter-proposals to RBI’s proposal.
• Parliament’s lower house (the National Council) presented a counter-proposal that replicated many of the more stringent requirements of RBI’s proposal, notably the liability of Swiss companies for failing to prevent human rights and environmental violations; parliament’s upper house (the Council of States) presented a counter-proposal requiring companies to conduct due diligence on human rights, environmental standards, conflict minerals and child labour in line with existing standards like EU Conflict Minerals legislation and the EU Non-Financial Reporting Directive, but did not include a provision for liability of Swiss companies.

On 5 June 2020, the conciliation committee voted in favour of the less stringent counter-proposal, which was subsequently approved by both chambers of parliament. Since the members of the Responsible Business Initiative reject this counter-proposal, there will be a public referendum on the RBI in late 2020.

Some companies are concerned that they will face a flood of legal cases that will negatively impact their ability to do business globally. However, many companies have expressed support for a more comprehensive mandatory HRDD approach, including Nestlé, Firmenich, IKEA and Trafigura, as well as multiple Swiss business and industry associations and investors. A survey conducted in May 2020 (commissioned by RBI) indicated that 78% of Swiss voters favor the RBI proposal:

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Source: Swiss Coalition for Corporate Justice, Support for the Responsible Business Initiative Continues to Grow (26 May 2020)

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“We believe that appropriate legislation could provide further incentives for companies to address their potential impacts on human rights and the environment. Such legislation should typically include the obligation to conduct human rights due diligence as defined in the UNGPs. The ultimate goal of such regulatory framework should not be to increase litigation, but to advance corporate awareness on human rights and environmental responsibility, which should translate into collaborative, impactful and effective actions.”                      

Henrietta Fore, UNICEF Executive Director, COVID-19 may push millions more children into child labour – ILO and UNICEF (11 June 2020)