Jerome Bellion-Jourdan
Senior Fellow in Residence, Global Governance Center
Graduate Institute of International and Development Studies

“Oui, a des multinationales responsables » ; « Non, à une initiative irréaliste pour nos entrepreneurs » ; « Business suisse. Conséquences mondiales » These slogans, responding to the “Responsible business initiative – Protecting human rights and the environment”, were displayed on billboards across Switzerland before Swiss citizens casted their votes on 29 November 2020. Despite a tight majority (50,7%) in favour of the initiative, it failed to pass after being rejected by a majority of Swiss Cantons. The initiative was far-reaching and would have introduced new statutory obligations for Swiss businesses, considering not only their own activities, but also the activities of their subsidiaries, suppliers and business partners. The initiative also foresaw that Swiss companies would be liable for damage caused by companies that they control, unless they could demonstrate compliance with their due diligence obligations. Although it did not materialise, this initiative is another milestone in the push towards mandatory due diligence at national, regional and global levels.

Billboards on the ‘Responsible business initiative’ in Switzerland

Legal developments on due diligence at the national and regional levels

“States are not off the hook”, I wrote in a previous blog post. 2021 will mark the 10th anniversary of the UN Guiding Principles on Business and Human Rights (UNGPs). Speaking at a conference hosted by Germany on “Human Rights and Decent Work in Global Supply Chains,” in October 2020  Prof. John Ruggie, the architect of the UN Guiding Principles, recalled that the UNGPs were “conceived to generate an ongoing interactive dynamic of a smart mix of measures – voluntary and mandatory, national and international –”. Prof. Ruggie noted that “governments, with exceptions, have been a weak link in this dynamic”. The situation may be changing with States taking steps to fulfil their “duty to protect”. When it comes to human rights due diligence, a process that business enterprises should carry out to “identify, prevent, mitigate and account for how they address their adverse human rights impacts” (UNGP15), legislation is increasingly on the cards with potentially far reaching impact on global supply chains.

In Switzerland, the rejection of the Responsible Business Initiative gave way to a counter-proposal approved by the Parliament introducing new – albeit more limited – reporting and due diligence obligations. Several European Union (EU) Member States have adopted legislation. They include France (“Law on the duty of vigilance”) and the Netherlands (“Child Labour Due Diligence”). Germany is likely to follow with a law next year.  Business companies and other stakeholders have warned that a patchy approach to legislation could lead to challenges for compliance and enforcement. This is one of the rationales for an EU-wide legislation, which may become a reality as early as next year.

In times when political leadership has become rare, European Commissioner for Justice Didier Reynders has shown remarkable determination. Speaking at the 9th annual UN Forum on Business and Human Rights on 16 November 2020, Commissioner Reynders confirmed his intention to propose a Directive on Sustainable corporate governance introducing a cross-sectorial mandatory human rights and environmental due diligence. This proposal comes in the wider context of the European Green Deal and the Commission’s Communication on the (COVID-19) Recovery Plan that foresees that sustainability should be further embedded into the corporate governance framework. A consultation process is underway to inform the content of the possible legislation which could also cover other issues such as the Director’s Duty of Care.

This is an excerpt. To read the full article, visit The Global.
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