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Corporate responsibility is back on the political stage

Important concerns of the Corporate Responsibility Initiative, which narrowly failed in 2020, may be resumed. Because the EU is tightening its regulations, the Federal Council also wants to re-examine the situation.

Some concerns of the Corporate Responsibility Initiative, which narrowly failed, may be taken up again.

Anthony Anex / Keystone

In November 2020, the corporate responsibility initiative was accepted by the people, but it failed due to the number of stands. The indirect counter-proposal drawn up by Parliament came into force automatically at the beginning of this year. It obliges large Swiss companies to report on their risks in the areas of the environment, labor and human rights and on their anti-corruption measures. Special rules of care and transparency also apply to minerals and metals from conflict zones and to child labour.

When the counter-proposal was drawn up in the run-up to the vote, it still corresponded to the regulations in the EU. This was also a core argument of the Federal Council against the popular initiative: Switzerland did not want to go it alone, but wanted an “internationally coordinated approach”. In the meantime, however, the EU has followed suit and is proposing regulations that go well beyond the Swiss regulations. This puts Switzerland under pressure.

The Federal Council analyzed the situation at its meeting on Friday. He assumes that the Swiss rules need to be adjusted. A consultation draft should be drawn up by July 2024 at the latest, which will also examine the consequences for the Swiss economy, according to the statement by the Justice and Police Department.

For example, in the EU, smaller companies (250 or more employees) should also have to report on the risks of their business activities in the areas of the environment, human rights and the fight against corruption, as well as the measures taken. In contrast to the Swiss initiative, the EU proposal even provides for civil liability in certain cases if suppliers have caused damage. This liability clause should also apply to subsidiaries abroad and to suppliers. Unlike in Switzerland, the steps should be checked by external auditors.

A national isolated solution is hardly an option for Switzerland. Since around 60 percent of Swiss exports go to the EU, the Swiss economy is severely affected by the EU rules, writes the Federal Council. Because the EU Commission’s proposal provides for a third-country regulation. It includes all companies that are active in the EU. According to estimates by the EU Commission, around 4,000 companies from third countries, including Switzerland, will fall under the EU directive.

With a follow-up in Swiss legislation, the Federal Council wants to ensure that local companies do not suffer any competitive disadvantages. However, Switzerland has no obligation to adopt the EU draft regulations. The Federal Council therefore states that there is room for maneuver when assessing whether Swiss law should be amended. Whether and to what extent there is a need for adjustment ultimately remains a political decision.

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