UPDATED: World’s strictest corporate responsibility plan fails in Swiss vote

UPDATED: World's strictest corporate responsibility plan fails in Swiss vote
Photo from 19 November 2020: AFP
A plan in Switzerland to impose the world's strictest corporate responsibility rules, which would have made Swiss-headquartered multinationals liable for abusive business practices worldwide, failed to pass in a vote on Sunday.

The proposal would have amended the Swiss constitution and forced such companies to ensure they and their suppliers respected strict human rights and environmental protection standards.

But it failed to reach the double majority required for initiatives to pass, under federal Switzerland's system of direct democracy.

Initiatives require support from a majority of voters nationwide, and from a majority of Switzerland's 23 cantons, three of which are split in half.

While Swiss voters overall backed the initiative by a very narrow margin, a majority in most cantons voted against it.

Some 1,299,173 voters, or 50.7 percent, backed the initiative, according to full results published by the ATS national news agency. The turnout was 46.7 percent.

However, it only achieved a majority in eight and a half cantons — including the four major cities of Zurich, Geneva, Basel and the capital Bern — with the rest voting against.

Softer counter-proposal triggered

The initiative was launched by an alliance of 130 non-governmental organisations and had the backing of trade unions and church groups.

It was opposed by both the government and parliament, which warned that while its intention was good, the proposed legislation went “too far”.

The rejection by voters automatically activated the government's counter-proposal, which also requires companies to report on rights, environmental protections and corruption issues — but without being liable for violations.

Supporters of the rejected initiative plastered Swiss towns and cities with posters highlighting environmental degradation and human suffering caused by Swiss-based companies.

Campaigners also underscored how pesticides long banned in Switzerland are still sold by agrochemicals giant Syngenta in developing countries, and deplored small-particle pollution spewed from a cement plant owned by LafargeHolcim in Nigeria.

A picture taken on November 22, 2020 in Lausanne shows a campaign banner reading in French: “Corporate responsibility initiative, Yes!” ahead of a November 29, 2020 nationwide vote on a people's initiative to impose due diligence rules on Swiss-based firms active abroad. Fabrice COFFRINI / AFP

Multinationals are important drivers of the Swiss economy, which at the end of 2018 counted close to 29,000 such corporations, accounting for more than a quarter of all jobs in the country, according to official statistics.

The Swiss business community argued that the amendments could have been detrimental for all Swiss companies, not just those that behave badly.

Businesses and employer organisations voiced particular concern over a provision that would have made Swiss-based firms liable for abuses committed by subsidiaries unless they could prove they had done required due diligence.

While backers of the rejected initiative acknowledged that most companies respect rights and environmental protections, they insisted that voluntary measures were not enough to bring the rest in line.

Weapons financing ban rejected

Meanwhile voters rejected a separate proposal to ban funding companies that manufacture weapons and other materials of war — a move which could have blocked billions of dollars worth of investments.

The initiative would have barred the Swiss central bank and pension funds from investing in companies that make more than five percent of revenues from sales of war material — while arms manufacturers would have been denied credit lines in Switzerland.

The initiative failed on both counts. Some 1,460,755 voters, or 57.5 percent, voted against the proposal, on a 46.4 percent turnout, according to the results published by ATS. Furthermore, a majority in only three and a half cantons voted in favour.

A man looks at a campaign banner reading in French “Responsible enterprise, NO to the initiative that misses its target” displayed in the streets of Geneva, on November 29, 2020.  Fabrice COFFRINI / AFP

Neutrality question

Famously neutral Switzerland, which has not been to war in centuries, already bans the production of nuclear, biological and chemical weapons, as well as landmines and cluster munitions.

But a coalition of peace groups and left-leaning parties sought a constitutional amendment making it illegal to finance any companies that make any form of war material, including assault rifles, tanks and their
components.

According to a report earlier this month by research group Profundo, the central bank, large banks like UBS and Credit Suisse and other Swiss financial institutions have nearly $11 billion worth of loans and investments in arms companies, including BAE Systems, Lockheed Martin and Northrop.

Backers of the initiative claimed that the Swiss financial sector's investments in arms companies were “incompatible” with Swiss neutrality.

But the government said the definition would effectively block funding of civil aviation firms such as Boeing, Airbus and Rolls Royce, and harm pensions.

EXPLAINED: What’s at stake in Switzerland's November referendums?

READ ALSO: Everything you need to know about Switzerland's 'corporate responsibility' referendum


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