The indirect counterproposal to the corporate responsibility initiative

In November 2020, Swiss voters rejected the popular initiative “For responsible companies – to protect people and the environment”, also known as the Corporate Responsibility Initiative (CRI). This means that Parliament’s indirect counter-proposal will now come into force.

The indirect counter-proposal of the Federal Assembly provides for a reporting obligation for non-SMEs, which is to be anchored in law by means of a partial revision of the Code of Obligations (Swiss Code of Obligations). Besides, new penal provisions are to be introduced in criminal law, which will hold the company or the board of directors responsible in the event of violations. The counter-proposal also provides for new due diligence requirements in the areas of child labor and conflict minerals. The indirect counter-proposal will next be published in the Federal Gazette, beginning the 100-day period in which an optional referendum is possible.

The proposed reporting obligation does not apply to all companies. Only companies with a balance sheet total of at least CHF 20 million or sales revenue of at least CHF 40 million are affected by the obligation. The company must also employ at least 500 full-time employees on an annual average to be affected by the reporting obligation (new Art. 964bis para. 1 Swiss Code of Obligations / new Art. 964a para. 1 Swiss Code of Obligations). The reports, also known as ESG reports, must contain information on the topics of environment, social affairs, employees, human rights, and combating corruption at home and abroad. This information is intended to provide the various stakeholders with a better understanding of the company’s activities (new Art. 964ter para. 1 Swiss Code of Obligations / new Art. 964b para. 1 Swiss Code of Obligations).

The newly envisaged due diligence obligation applies to all companies that have their registered office in Switzerland and transfer minerals or metals containing tin, tantalum, tungsten or gold from conflict and high-risk areas into free circulation in Switzerland or process them in Switzerland, or offer products or services for which there is a reasonable suspicion that they were manufactured or provided using child labor (new Art. 964quinquies para. 1 item 1 Swiss Code of Obligations / new Art. 964j para. 1 items 1 & 2 Swiss Code of Obligations). The duty of care requires the following four measures to be taken by an affected company:

• Implementation of a management system to establish a supply chain policy and to ensure traceability of supply chains;
• Implement a risk management system that ensures measures to identify and minimize risks along the supply chain;
• Compliance with due diligence requirements must be verified by an independent person (this only applies to due diligence regarding conflict minerals);
• The company must submit an annual report.

As mentioned, the indirect counter-proposal also provides for sanctions. In the future, companies that intentionally provide false information or violate the legal obligation to keep records are to be punished with a fine of CHF 100,000. Anyone who negligently violates these provisions will be punished with a fine of CHF 50,000.

The CCI and the indirect counter-proposal of the Federal Assembly follow the sustainability trend, which has gained more and more momentum in recent years. However, the publication of non-financial key figures helps stakeholders and can also create benefits for the company itself. Nevertheless, the planned obligations lead to a large administrative burden and may also lead to structural adjustments in some companies. It is conceivable that companies will withdraw from specific markets or rethink their entire supply chain; otherwise, there is a risk of reputational damage. Consequently, this may also lead to increased financial expenditure. It remains uncertain whether the indirect counter-proposal will lead to Switzerland losing its attractiveness as a business location.