Business rights or human rights? Swiss vote shines spotlight on companies

26th November 2020

By: Reuters


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ZURICH – A billboard of a runny-nosed, dour-faced girl framed by Glencore's sprawling zinc mine in Peru greets commuters at Zurich's main train station with an ominous slogan: "Water contaminated. Child poisoned. Commodities firm liable."

As the only large mining firm based in Switzerland, Glencore has become the unwilling poster child of a campaign to change the constitution so Swiss companies are liable at home for human rights abuses or environmental harm they cause abroad.

Voters will now choose in a referendum on Sunday between the new proposals and a milder government version that would force firms to step up checks on their overseas operations and supply chains but stops short of extending liability to Swiss courts.

In a campaign that has polarized the nation, the government and multinationals say the Responsible Business Initiative goes too far, while activists, religious groups and various political factions say Switzerland risks falling behind other countries in tackling progressive social and economic issues without it.

Glencore for one says the accusations levelled against it by the campaign are misplaced, and wrong.

Since taking a majority stake in 2017 in the Cerro de Pasco mine pictured in the billboard, Glencore said it had done much to address concerns about pollution from the site which occurred before it took over.

"It hurts us to see these accusations," Glencore CEO Ivan Glasenberg told Swiss newspaper NZZ.

SwissHoldings, which represents Swiss multinationals such as pharmaceutical giants Novartis and Roche, food company Nestle, and Glencore, says it is self-evident the issues raised by the initiative need to be addressed.

But it says the proposed measures could push up compliance costs and legal risks for companies to the point where they shun some parts of the world, potentially leaving businesses in the hands of firms that may not take the same precautions.

"The worst that could happen would be that people like us who are at the forefront of sustainability ... are forced to move out of certain geographies because of a law that has a good purpose but is poorly executed," said Antoine de Saint-Affrique, chief executive of Swiss chocolate maker Barry Callebaut .

"You wouldn't solve the issue, you would make the issue bigger," he told reporters.

Home to some of the world's biggest companies and a major hub for finance and commodities trading, Switzerland has become one of the world's leading commercial centres thanks to its business-friendly laws, regulations and low taxes as well as its history of political neutrality and economic stability.

Yet with three days to go, polls suggest the companies and the government are losing the argument. A survey by Swiss broadcaster SRF showed 57% of those polled backed the responsible business initiative over the government proposal.

The government says it supports the ethos of the initiative but that its version is in line with international standards as it leaves foreign subsidiaries and suppliers economically controlled by multinationals liable for their own damage, usually in foreign courts.

But for Florian Wettstein, a business ethics professor at the University of St. Gallen and co-organiser of the Responsible Business Initiative, it's also about Switzerland keeping up with global progress on sustainable business practices.

"Switzerland tends to fall more towards the bottom of the pack, not just in terms of human rights but also on socially economically progressive issues. The train is going very fast and, without the initiative, we risk missing it once again," Wettstein told Reuters.

A European Union proposal could bring in even more stringent liability laws for companies in the bloc while countries such as France, Britain and Canada have already enacted laws targeting liability on all or some human rights in business concerns.

In Switzerland, the initiative could lead to sharper scrutiny of the country's commodities hub and the institutions that finance it, investors and non-governmental organisations (NGOs) in Switzerland and abroad told Reuters.

Besides Glencore, rival commodities traders Vitol, Gunvor and Mercuria all have head offices in Switzerland and Trafigura has a major trading operation there.

Anneke Van Woudenberg, executive director of RAID, an NGO in London which exposes corporate wrongdoing, said the Swiss initiative could also have a preventive effect, by giving companies incentives to take more care.

RAID submitted a complaint to the Organisation for Economic Co-operation and Development in September against Glencore.

The complaint says a spill at an oilfield in Chad owned by PetroChad Mangara Ltd, a Glencore subsidiary, caused injuries and environmental damage. Glencore denies wrongdoing.

Under the Swiss initiative, Glencore would have to show that it took all necessary measures to alleviate the spill and any harm caused, if a lawsuit were filed in Switzerland.

"That would be critical to any defence if Chadian citizens came forward claiming human rights harms," Van Woudenberg said.

Both sides have poured money into the campaign and leading Swiss newspaper Tages-Anzeiger has estimated it will be the most expensive voting campaign of all time in a country that holds more referendums than any other nation.

If the initiative is passed, large companies and those in high-risk businesses would have to check that activities throughout their supply chains complied with internationally recognised human rights and environmental standards.

More critically, they would also be liable in Swiss courts if victims can show damage was caused by firms they control.

The initiative would be more progressive than similar rules in France as it places more burden on companies to show they took steps through their due diligence to avoid harm - rather than victims having to prove they didn't.

Denise Laufer, head of economics at SwissHoldings, said its members work with up to 400,000 direct suppliers and a million downstream suppliers globally, and the initiative could increase compliance costs and legal risks by 20% and 25% respectively.

"We clearly support the commitment to protect and strengthen human rights and the environment along the supply chain of our companies," she said. "But these instruments are the wrong ones."

It's not just the commodities sector that is paying heed.

This month, the chairmen of 16 of Switzerland's biggest industrial, financial and consumer goods companies signed a full-page letter in one of the country's leading dailies, expressing concerns about the initiative.

Credit Suisse, the country's second-biggest bank, then took out several more advertisements against the proposal.

"It will be touching on supplier (obligations) which will be impossible or very difficult to fulfil," the bank's chief executive, Thomas Gottstein, told reporters. "It's a proposal which, in my view, is very bad for Switzerland."

Edited by Reuters




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