Keeping business accountable

BERN The Federal Council has warned Swiss companies operating in developing countries that they must do more to ensure the protection of human rights and the environment, otherwise the government may step in. The matter is expected to go before the parliament in September.

The 28 May Council report was in response to a petition by Droits Sans Frontières/Rights Without Borders (DSF) seeking greater transparency and responsibility from Swiss multinationals abroad, whether Glencore in the Congo, Holcim in Guatemala or Nestlé in Africa. Representing 50 human-rights groups, including Amnesty International, DSF applauded the Council for recognizing the problem, but deplored the absence of recommendations for binding regulation.

DSF member Bread for All, a Protestant charity that has been working with developing countries for more than 50 years, launched the petition in 2011. According to spokeswoman Chantal Peyer, this followed an influx of mining and extraction industries and commodities traders that opened headquarters in Switzerland for fiscal reasons. “A lot of research by NGOs revealed that some of these companies had quite troubling human-rights records abroad,” said Peyer. The Swiss multinationals concerned include commodities giant Glencore, the agribusiness leader Syngenta, the pharmaceutical producer Roche, and food and water company Nestlé, based in Vevey.

Another DSF member, Bern-based Alliance Sud, which lobbies for Switzerland’s major development agencies, also welcomed the report and called attention to the part that said, “Assuming that Switzerland should adopt a combination of binding and non-binding measures in this field, we recognize that Switzerland has a responsibility to actively promote the implementation of human rights and environmental protection.” The big question is whether parliament will agree to any binding requirements.

Many Swiss politicians and businesses feel such measures should be voluntary and point to their own corporate social responsibility (CSR) policies. Human-rights activists with the Council of Europe, the OECD and the UN, believe voluntary approaches have not gone far enough.

Peyer pointed to the 2011 multinational studies by UN Special Representative for business and human rights John Ruggie, which called on governments to adopt more regulation. “Switzerland hasn’t wanted to do that until now so this is the first time they’ve recognized the importance of human-rights due diligence. The Swiss government, for the first time, has accepted that there can be instruments for a legally binding requirement for companies to do human-rights due diligence,” she said.

DSF members believe that Switzerland, which has, globally, the largest number of multinationals per capita, needs to do more to preserve its reputation as a location for responsible business. The European Parliament recently adopted a directive requiring multinationals to report annually on their human-rights, environmental and social impacts, while the UK requires directors to consider – and publish reports on – the long-term effects of their businesses.

With the ball in Bern’s court, Peyer is concerned that parliament may find it hard to get a majority. Despite growing recognition that companies may violate human rights, there is no agreement on how to address this. “The fear is that binding rules would create a competitive disadvantage for Switzerland.” DSF, however, may have the last word. It could go forward with a popular initiative for an issue that, members say, already has widespread support.