Swiss vote on making firms liable for global rights abuse

Swiss voters will decide on a law on Sunday that would make businesses in the country financially and legally liable for human rights violations or environmental damage.

Supporters of the Responsible Business Initiative have hung banners and signs from balconies and fences across the country. Meanwhile, Swiss banks and other powerful businesses have taken out expensive newspaper ads warning of dire consequences for the economy.

Supporters of the initiative say that the referendum — which would amend the Swiss constitution if it passes, is important, given the global footprint of top companies in Switzerland, a hub for consumer goods, finance and commodities trading.

Corporate responsibility is considered a priority for multinationals and companies such as Nestlé say they scrutinise their supply chains from start to finish to ensure fair working practices, and to prevent child labour or environmental damage.

Mark Schneider, Nestlé (NSRGF) CEO told Swiss newspaper Handelszeitung earlier this month:

"We buy from 200,000 dairy farmers around the world every day. If this is accepted, we would be answerable for 200,000 companies."

The new law seeks to enforce these standards, allowing victims of alleged human rights violations or environmental damage to sue Swiss companies in Swiss courts.

It would also mandate that Swiss firms assess the human rights and environmental practices not just of their own operations, but also of subsidiaries, suppliers and business partners, ensuring they're in line with international standards.

Businesses say the initiative could open the door to a flood of court cases. They fear the proposed rules could be applied very broadly, leaving them exposed to legal action even if the wrongdoing was committed by small suppliers.

The Swiss government and both houses of parliament have also rejected the new law, promising instead to introduce new rules requiring companies to strengthen checks on their overseas operations, and to tie Switzerland to responsible business laws being considered by the European Union.

Swiss Justice Minister Karin Keller-Sutter said:"This proposal goes too far, it's too radical. The government was especially worried about the law's provision to make Swiss companies liable for the actions of their independent suppliers.

France has also enacted a broad law that holds companies responsible for abuses throughout their supply chains, though the Swiss government claims that the Responsible Business Initiative would impose even tougher liability on companies.

The European Commission is expected to propose new rules for due diligence on human rights and the environment throughout supply chains in 2021. There's talk they could be the most demanding to date.

Opinion polls show a majority of voters may say yes to the new law.