Swiss people to decide upon corporate responsibility of Swiss group companies abroad

The so-called Responsible Business Initiative (Konzernverantwortungsinitiative) (hereinafter the “Initiative”) in Switzerland aims that Swiss companies shall comply with international environmental and human rights standards abroad. The specific instruments of the Initiative are controversial. For example, it intends to implement a direct liability of Swiss parent companies for misconduct by foreign subsidiaries and dependent suppliers. Furthermore, it intends to apply Swiss law to foreign operations. In addition, the Initiative demands that in the event of damage claims the parent company’s duty of care towards the affected subsidiary is deemed to have been violated without proof to the contrary. This basically leads to a reversal of the burden of proof.

It is now clear that the Initiative will not be withdrawn by the initiators. The Swiss people will therefore vote on the initiative – probably next November. On 9 June 2020, the Swiss lawmaker decided that the Initiative will be opposed by an indirect counter-proposal from the Swiss parliament (hereinafter “Counter-Proposal”). Delegates of the two chambers of the Swiss parliament had agreed on the Counter-Proposal in a conciliation conference. The Counter-Proposal adopts some elements of the Initiative, but does not include new liability rules. Thus, in the case of damage claims abroad, the responsible subsidiary company would continue to be liable in the first place in accordance with local law. In certain cases, direct liability of the Swiss parent company for damages abroad might still be possible. But the already existing concepts of group liability are tied to narrow preconditions and are not supported by broad case law.

The Counter-Proposal, which has now been agreed by Swiss parliament’s conciliation conference, calls for reporting obligations for larger companies on issues such as human rights, the environment and corruption in line with EU regulations. It also envisages specific duties of care with regard to conflict minerals (also based on the EU model) and child labour. According to the proponents of the Counter-Proposal, including the Swiss Federal Council, these rules would bring Switzerland up to international standards. The committee of the Initiative, however, describes the Counter-Proposal proposal as “ineffective”. In some European countries and also at the EU level, discussions would underway to tighten the rules. According to these critics, by accepting the indirect Counter-Proposal of the Swiss parliament, Switzerland would therefore fall far behind at international level already in a few years.

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