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

Cerro De Pasco Resources

26/11/2020 06:00

* Swiss vote on Nov. 29 on 'Responsible Business Initiative'
    * Proposals aim to make Swiss companies more accountable
    * Campaign has polarized the business-friendly country
    * Swiss multinationals say initiative proposals go too far

    By Brenna Hughes Neghaiwi
    ZURICH, Nov 26 (Reuters) - 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
 GLEN.L  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 Chief
Executive Ivan Glasenberg told Swiss newspaper NZZ.
    SwissHoldings, which represents Swiss multinationals such as
pharmaceutical giants Novartis  NOVN.S  and Roche  ROGN.S , food
company Nestle  NESN.S , 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
 BARN.S .
    "You wouldn't solve the issue, you would make the issue
bigger," he told reporters.
    
    'BOTTOM OF THE PACK'
    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.
    
    WRONG INSTRUMENTS?
    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  CSGN.S , 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."

 (Reporting by Brenna Hughes Neghaiwi; Additional reporting by
Silke Koltrowitz in Zurich, Helen Reid in Johannesburg, Emma
Farge in Geneva, Julia Payne and Matthew Green in London;
Editing by David Clarke)
 ((brenna.neghaiwi@thomsonreuters.com; +41 58 306 77 35;))