Why Switzerland's 10-year debate on responsible business matters

Last Sunday, Switzerland decided not to move forward with the Responsible Business Initiative (RBI), which was in favour of stricter environmental and human rights legislation for Swiss organisations. The initiative would have allowed victims of human rights or environmental abuses the right to take Swiss companies to court.

While the majority of Swiss voters were in favour of it, the initiative didn’t get the required cantonal support. Popular initiatives in Switzerland require both cantonal and popular majority for passing. This is the first time since 1955 that the people’s voice differs from that of the cantons,’ according to le Temps.

“The whole country had a very large debate, a debate which was healthy and questioned the values which we want to guarantee in a globalised economy” said Lisa Mazzone, a Green Party member sitting at the National Council of Switzerland, to RTS Info.

Switzerland was one of the first countries to adopt the United Nations’ Guiding Principles on Business and Human Rights, "a set of guidelines for States and companies to prevent, address and remedy human rights abuses committed in business operations" in 2011. Activists, human rights groups, various politicians and environmentalists have also been campaigning to raise awareness about business standards over the past 10 years, Swissinfo reports. Among them is Greenpeace Switzerland, which after the vote reported “a certain validation despite being disappointed.”

Critics of the initiative feared it would result in multinationals moving away from Switzerland, with a considerable toll for the country’s economy. According to Imogen Foulkes of BBC News “a hard-fought campaign, and in the end economic worries, exacerbated by the Covid-19 pandemic, influenced voters”.

The Swiss Parliament will propose a lighter version of the RBI, free of the original coercive mechanism, reported Geneva Solutions.

"Targeting a recovery in GDP growth alone will not be sufficient to advance the holistic economic, environmental and societal reset that is needed at this moment" finds the World Economic Forum's Dashboard for a New Economy Towards a New Compass for the Post-COVID Recovery.

The report proposes targets that go beyond GDP growth and care for clean energy and social resilience for instance. Also known as environmental, social and governance (ESG) indicators, these buckets serve as roadmaps for countries and governments around the world.

In fact, countries increasingly aim to include ESG standards or a form of them in their legislation. In 2017, France introduced reasonable due diligence for bigger organisations, while the UK has a version of what was proposed in Switzerland, and laws are being passed in Luxembourg, Germany, Finland, Norway and the Netherlands, according to Heidi News. The outlet also reports the European Commission will propose union-wide rules from 2021.

The ESG standards released by the Forum earlier this year are divided into four pillars (principles of governance, planet, people and prosperity) and include 21 core and 34 expanded common metrics. While there are no joint standards globally, these were compiled following contribution from The International Business Council made of 120 of the world’s largest companies, including Swiss multinationals.