Switzerland Considers Mandatory Human Rights Due Diligence Legislation

Switzerland Considers Mandatory Human Rights Due Diligence Legislation

In May 2018, the Legal Affairs Committee of the Swiss National Council put forward an indirect counter-proposal in response to the Responsible Business Initiative. On June 14, 2018, the counter-proposal was approved by the Swiss National Council.

The initiative is based on the United Nations Guiding Principles (UNGC) and the Organization for Economic Co-Operation and Development (OECD) guidelines for multinational enterprises (MNEs), and will compel large Swiss companies and companies in high-risk sectors to undertake human rights and environmental due diligence in their business activities abroad. The counter-proposal calls for mandatory human rights due diligence and parent company liability, and suggests the requirements should apply to Swiss companies that exceed two of the values listed below in two consecutive financial years, either as a single entity or together with one or more domestic or foreign companies they control:

  • Balance sheet total of 40 million Swiss Francs.
  • Sales of 80 million Swiss Francs.
  • 500 full-time positions on an annual average.

The counter-proposal also applies to companies that may have a particularly high risk of violating provisions for the protection of human rights and the environment through their activities, though it would not apply to companies with smaller risk.

Although the regulation is still taking shape, companies will be required to identify potential and actual impact of their business activities on human rights and the environment. They will also be required to identify and take action to mitigate risks, monitor the effectiveness of the measures they adopt and ensure effective remedy for violations. Above all, companies will be legally obligated to comply with the provisions stated and be liable for “damages caused to life and limb or property abroad by companies actually controlled by them” but would not be liable if they can demonstrate they have undertaken due diligence to comply with the law.


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here is growing public interest in ethical business practices, which is driving states to legislate corporate action on business and human rights topics. A recent survey highlighted that 89 percent of people think Swiss companies should be required to respect human rights and the environment, locally and abroad, and a further 92 percent believe a company’s subsidiaries and suppliers should also face these requirements. It is clear that consumers are becoming more conscious and driving change. Companies should consider consumer interests as key drivers for change in their operations and supply chains, as brand image can impact businesses just as much as regulatory requirements.

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As countries and consumers around the world become more focused on corporate social responsibility, companies in Switzerland and beyond need to ensure their CSR programs are prepared to scale and demonstrate due diligence. The Corporate Social Responsibility Suite helps companies manage every aspect of their responsible sourcing programs more efficiently, automating the collection and validation of data and helping to identify and assess risk in the supply chain.

To learn more about how the Corporate Social Responsibility Suite can help your company meet your corporate social responsibility requirements, reduce reputational risk and more, contact us at info@assentcompliance.com.

 

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