Compliance News

European Parliament agrees to ban unverified green product claims

By a vote of 467 to 65, the European Parliament lawmakers enacted in a first reading a series of rules designed to safeguard consumers against greenwashing, which refers to deceptive environmental assertions made by companies according to the press release issued by the Parliament. According to these rules, companies are in future obligated to provide verification for product marketing claims like “less polluting” and “biodegradable” prior to their implementation.

The vote establishes the position adopted by Parliament regarding the “Directive on Green Claims” proposed by the European Commission. In March 2023, the EU Commission issued the draft of a directive aiming to provide consumers with dependable and verifiable information. This action was taken in response to a recent study which revealed that over 50% of green claims made by companies in the European Union were either ambiguous or deceptive, and an additional 40% lacked any supporting evidence.

Minimum requirements for businesses to substantiate, communicate, and verify their green claims were included in the proposal of the EU Commission. Businesses shall be obligated to provide scientific evidence and independent verification to ensure the veracity of their voluntary environmental claims. In addition, the directive aims to curtail the widespread use of private environmental labels by mandating their dependability, transparency, independent verification, and routine review. Furthermore, the directive shall aim to allowing new labels only if they were developed at the EU level, and their approved shall only occur if they demonstrate greater environmental ambition than existing label schemes.

The position adopted by the European Parliament would require the evaluation of green claims and evidence from companies within a period of 30 days. Additionally, the verification would be expedited and simplified for more prevalent and straightforward categories of claims. Green claims predicated solely on the utilisation of carbon offsetting schemes would be strictly prohibited under the regulations. However, companies would be permitted to reference offsetting and carbon removal schemes in their advertisements, provided that they have achieved maximum emission reduction, employ the schemes exclusively for residual emissions, and utilise only certified and high integrity carbon credits.

Small and medium-sized enterprises would be granted an additional year to adhere to the revised regulations, whereas micro enterprises would be granted an exemption. In addition, companies that violate the regulations would be subject to sanctions under the new regulation, including exclusion from public procurements and fines of at least 4% of annual revenue.

The file will now have to be followed up by the new European Parliament after the European elections that will take place in from 6 – 9 June 2024.

 

Sanctions: Swiss ordinance on measures in connection with the situation in Ukraine

On 11 March 2024, the Federal Department of Economic Affairs, Education and Research (EAER) updated the document “Interpretation guide for sanction measures” (Auslegungshilfe für Sanktionsmassnahmen).

The changes are evident in the correction mode.

Federal Council decides on direction for reform of competition authorities

Administrative rulings addressing violations of the Cartel Act are initially rendered by the Competition Commission (COMCO). The cases, nevertheless, undergo investigation by the COMCO secretariat. The Federal Council intents on reforming this organization of the competition authorities and enhancing the effectiveness of this separation between investigation and decision-making body. As a result, the Federal Council issued guidance to the Federal Department of Economic Affairs, Education, and Research (EAER) on 15 March 2024, mandating the submission of a consultation draft for a reform by the middle of 2025.

According to the Federal Council’s press release, the Secretariat will in future consistently conduct the investigation without the involvement of COMCO to strengthen COMCO’s independence when making decisions. In addition, the number of COMCO members is aimed to decrease from the current 11-15 to 5-7 members, while their workloads will increase. These measures are intended to strengthen and professionalize the COMCO against to its secretariat. However, COMCO is intended to continue to be a broad militia authority.

Furthermore, the EAER has been instructed to assess whether a procedural officer can relieve COMCO. This individual would oversee adherence to the rights of the defending parties, allowing the COMCO members to concentrate more on the substantial matters at hand. Upon completion of the primary investigations, the COMCO Secretariat shall be obligated to provide the accused companies with a status report on the preliminary findings, allegations, and intended legal ramifications.

Additionally, the enhancement of the appeals process before the Federal Administrative Court (FAC) is a priority for the Federal Council. The FAC shall appoint specialist (part-time) judges to participate in competition cases. The objective of the Federal Council is to enhance the efficiency of the proceedings and fortify the economic acumen of the FAC. Furthermore, the time limits imposed on the parties to appeal significant COMCO rulings are to be eased.

By implementing these measures, the Federal Council is largely adhering to the recommendations of an expert commission led by former federal judge Hansjorg Seiler in developing these proposals. The commission concluded in its final report that COMCO functions properly in theory and has no constitutional deficiencies. As a result, a system change is deemed inappropriate.

Federal Council enacts Corporate Relief Act

On 29 September 2023, the Swiss legislator ratified the Corporate Relief Act (Unternehmensentlastungsgesetz, UEG, hereinafter «CRA»). The purpose of the CRA is to promote the digitalization of government services and reduce the regulatory expenses of companies. Following the expiration of the referendum deadline on 18 January 2024, the Federal Council decided on 15 March 2024, to implement the new law gradually. Consequently, on 1 April 2024, Articles 9 – 18 CRA (except for Article 11 CRA), which contain provisions regarding the central electronic platform for the provision of government services, will come into force. These provisions specifically pertain to the handling of personal data. These are essential components for the continuous functioning and growth of EasyGov.

Federal authorities, cantonal authorities, and third parties entrusted with administrative responsibilities (in the implementation of federal law) are required by Article 11 CRA to provide EasyGov access to digital government services. Due to the requirement of a specific ordinance, the implementation of Article 11 CRA and the corresponding ordinance is anticipated to commence in 2026.

According to the press release of the Federal Council, Articles 1 – 8 CRA will come into effect as of 1 October 2024. These encompass the obligatory evaluation of regulatory cost estimates and relief alternatives for newly implemented regulations, the assessment of relief potential for established regulations (referred to as “area studies”), and ongoing monitoring (Art. 6 et seq. CRA). The subsequent implementation, as stated by the Federal Council, is due to supplementary obligations pertaining to explanatory reports on consultations and Federal Council dispatches. The purpose of the lead time is to facilitate the incorporation of these requirements and any further clarifications that may be required for ongoing legislative projects.

Moreover, the Federal Council has incorporated the organisational ordinance of the Federal Department of Economic Affairs, Education, and Research (EAER) into the CRA’s implementation. SECO will be entrusted with the oversight of the regulatory obligations imposed on businesses. In addition, the guidelines for regulatory impact assessments established by the Federal Council were modified to accommodate the EAER’s new requirements.

EU Rules Restricting the International Transfers of Non-Personal Data

While the EU GDPR regulates the international transfer of personal data, several recently enacted EU laws regulate the international transfer of non-personal data, which is any data that is not “personal data” under the GDPR.  In other words, these new laws apply to data that does not relate to an identified or identifiable natural person, including anonymized data and data about industrial equipment, significantly expanding the types of data subject to international transfer restrictions.  Some of this legislation has been enacted recently, and other legislation on this topic is making its way through the legislative process but has yet to be adopted.

In a recently published article, Kristof van Quathem and Anna Oberschelp de Meneses outline the current and forthcoming EU legislation on the international transfer of non-personal data

Ukraine: Switzerland implements the EU’s 13th package of sanctions

As part of a 13th package of sanctions adopted on 23 February 2024, the EU imposed new sanctions in response to Russia’s ongoing military aggression against Ukraine, which has continued for more than two years. On 29 February 2024, the Federal Department of Economic Affairs, Education and Research (EAER) followed suit on by expanding the Swiss sanctions lists under its jurisdiction to include a further 106 individuals and 88 entities and organisations as the Federal Council announced in its press release.

The newly sanctioned entities, organisations, and individuals are primarily engaged in the production of missiles, drones, anti-aircraft missile systems, and other military equipment within Russia’s military-industrial complex. Additionally, Russian companies and individuals involved in the supply of defence equipment from the Democratic People’s Republic of Korea to Russia are targeted by the new listings. In addition to judges and officials from the occupied territories of Ukraine, sanctions have been imposed on organisations and individuals involved in the forced transfer of Ukrainian children.

Further trade sanctions have been implemented in an effort to impede Russia’s acquisition of sensitive technologies and goods for its military. The export ban on dual-use goods and goods that may contribute to Russia’s military or technological advancement is expanded to include 27 additional entities under these measures. The scope of the export ban has been broadened to encompass a greater variety of products. For instance, components utilised in the design and production of drones are no longer permissible for sale or export to Russia.

The SECO adjusted the overview of the sanctions against Russia accordingly. All new measures became effective at 6:00 pm on 1 March 2024.

 

Digital Services Act enters into force

On 17 February 2024, a further part of the Digital Services Act came into force. While some regulations have already applied to 19 very large online platforms (VLOPs) and search engines (VLOSEs)s since 2023, they now apply to all platforms and hosting services. Corresponding services will soon have to take various user protection measures, including i) combating illegal content, ii) protecting minors, iii) informing users about the advertising displayed to them, iv) preventing advertising that is based on sensitive user data and v) making it easier to submit complaints and contact users as the EU Commission communicated.

Platforms not designated as VLOPs or VLOSEs will be supervised at EU Member State level by an independent regulator acting as the national Digital Services Coordinator (DSC). It will be the responsibility of the DSCs to ensure that these platforms play by the rules. DSCs will supervise and enforce the DSA for the platforms established on their territory.

In its press release, the EU Commission also communicated that it intends to adopt Guidelines on risk mitigation measures for electoral processes in March 2024. Furthermore, the EU Commission expects a public consultation on the data access delegated act in April 2024 with adoption by July 2024 and entry into force in October 2024. In May 2024, the EU Commission plans to adopt an Implementing Act on transparency report templates. Finally, the EU Commission made more details accessible online.

Past ECS Events 2024

ECS Working Group Events


Thinking Like a Scientist: Building a Modern Ethics and Compliance Program

On March 14 around 30 practitioners convened in the Zurich offices of E&Y.

Andreas Buscher introduces both speakers Zach Coseglia (co-founder and managing principal of R&G Insights Lab. Zach is an experienced litigator, investigator, and former compliance executive; he is also a thought leader on compliance analytics and organizational culture. Before founding the Lab, Zach held senior legal and compliance positions at Pfizer, including as Vice President and Global Head of Monitoring, Analytics and Digital Compliance; and as Assistant General Counsel and Chief Investigations Counsel for Asia Pacific, based in Beijing) and Hui Chen (Senior Advisor within R&G Insights Lab and an international leader and expert in organizational integrity. She was the first Compliance Expert at the U.S. Department of Justice, and authored the “Evaluation of Corporate Compliance Programs” document that redefined compliance expectations. She began her career as a federal prosecutor in the Department of Justice in Washington, D.C. and the Eastern District of New York. Hui has extensive in-house experience as a senior legal and compliance leader at Microsoft Corporation, Pfizer Inc., and Standard Chartered Bank, in locations across the globe).

The audience listened passionately to stories, studies and real-life examples where compliance did (not) have the desired effect. The speakers stressed the importance of a “human-centered” and “data-driven” approach when it comes to the compliance program and showed how data can be used across all elements of a compliance management program.


Decision Making in Health Care Compliance

Approx 20 participants met on March 5 in the Bayer offices in Zurich. Alex Fuchs (regional compliance officer at Seagen-Pfizer) and Patrick Wellens (co-chair of WG life sciences) presented to the audience some of the factors that determine the compliance philosophy of a company.

Not all companies have the same culture and philosophy with regards to compliance risks.  Some companies believe in training the employees and trust that employees will make the right decision; other companies believe in a shared responsibility between Compliance and the business (“compliance as an advisor”) and in other companies certain business transactions can’t be executed unless approved by Compliance.

Both speakers created some polling questions which triggered an interactive discussion with the participants why in their organization with regards to healthcare compliance (i.e. interactions with healthcare professionals, healthcare organizations and patient organizations such as sponsoring, congress, advisory boards, donations, patient assistance programs etc.) a particular compliance philosophy was chosen.

The benefit for the participants is to hear what healthcare compliance philosophies are chosen by other companies and why thereby reflecting on their own choices.


Competition Law Compliance and ISO 37301 – How Integrating Competition Law in a Compliance Management System can look like”.

On 18 January 2024, the ECS Working Group on Competition Law held its first event in Zurich.

Our first speaker was Dr. Karin Amberg, M.A., Senior Legal Counsel, Compliance Officer Competition Law at SBB and the topic of discussion was “Competition Law Compliance and ISO 37301 – How Integrating Competition Law in a Compliance Management System can look like”.

The event was followed by a drinks reception to celebrate the launch of the ECS Working Group on Competition Law.


EU Sustainability Due Diligence Directive

On February 26 members of the Working Group on Life Sciences came together in the Basel offices of Deloitte to listen to Sandra Klemm, partner at Amatin Law firm who gave an overview on the background and scope of the upcoming EU Directive, what are the obligations of companies, what are the expectations on companies with regards to due diligence  and what are civil liabilities if companies do not follow the EU Directive.

The participants then actively discussed what companies can do and how to best integrate this environmental and human rights due diligence in their existing third party due diligence framework.

How to create a Code of Ethics (with examples)

A code of ethics outlines the ethical principles that govern employee behavior in the workplace. It often includes the company’s values, as well as the policies meant to guide employees in how they make decisions and conduct themselves at work. The purpose of a code of ethics is to have a comprehensive and formal way of telling employees and stakeholders what their expectations are around how people will behave in the workplace.

A strong code of ethics will be memorable and inspire employees to live by its espoused values in their daily lives. This will hopefully prevent unethical behaviors that could hurt customer relations, scare away ethical employees, and ultimately tarnish the reputation of your company. In a new article recently, published, Jeff Rumage explains how to write a Code of Ethics and provides several examples of how this can be implemented.

Federal Council holds debate on EU deforestation regulation

As an element of the European Green Deal, the European Parliament and the EU Council adopted on 31 May 2023 the new Regulation (EU) 2023/1115 (“EU Deforestation Regulation” or “EUDR”) that seeks to prevent EU consumption from contributing to worldwide deforestation and forest degradation caused by agricultural expansion associated with the commodities in question as already reported by the ECS Compliance News. The EU Deforestation Regulation will be implemented in the EU from January 2025. The EUDR impacts cocoa, coffee, palm oil, rubber, soya, cattle, wood, and coffee, in addition to the goods manufactured from these materials, including coffee capsules, furniture, automobile tyres, and coffee capsules. Beginning in 2025, the placement or exportation of these raw materials and finished goods from the EU will be restricted to those that were not manufactured in regions that underwent deforestation after 2020, or that are otherwise unrelated to deforest degradation.

Additionally, Swiss firms that wish to export to the EU the raw materials and finished goods impacted by the EUDR will be required to comply with the new regulations. This is the case irrespective of Switzerland’s decision to adopt the EUDR fully or partially or abstain from doing so in its legislation. Switzerland exported to the EU approximately CHF 4 billion worth of EUDR-subject raw materials and finished goods in 2022. In total, the value of exports (EU and non-EU) was approximately CHF 7.5 billion.

The Federal Council deliberated on this subject during its meeting on 14 February 2024. The Federal Council will abstain from amending Swiss law for the time being, provided that mutual recognition with the European Union remains unattainable. Companies run the risk of encountering parallel regulations and duplicating efforts in the absence of mutual recognition. Organisations whose products are not designed for the European Union market and are thus exempt from the EUDR can prevent a substantial supplementary cost by abstaining from adaptation. By the summer of 2024, the Federal Council will conduct a comprehensive evaluation of the situation considering a regulatory impact assessment.

Nevertheless, the Federal Council acknowledges that Swiss companies impacted by the EUDR will bear a greater burden. Its primary objectives are to examine support measures for the affected industries and businesses and to continue the dialogue between the Federal Government and the business community regarding this subject. Additionally, it seeks clarification from the EU Commission regarding the prerequisites for establishing a connection to the EU information system and for the reciprocal acknowledgment of relevant regulations. In addition, the Federal Council wishes to specify which legal modifications would be required to harmonise Swiss law with the EUDR. The Federal Council has declared that it will give an update on the progress of these clarifications following the end of the summer break.

 

These are the upcoming dates for our Annual General Meetings:

Thursday, 21 March 2024
Thursday, 20 March 2025