«Corporate Justice» campaign holds policymakers to their duty
Rules for Business – Rights for People!
Lack of coherence, no global vision, no to binding measures – when it comes to regulating internationally active corporations, much remains to be done in Switzerland. The «Corporate Justice» campaign being mounted by Alliance Sud and over 50 other organizations hopes to change that.
Corporations operating internationally are the champions of globalization. And Switzerland is an important nerve centre of their economic power, which has increased significantly with the opening up of global markets. Our country has the highest number of multinationals per capita in the world. Alongside traditional companies like Nestlé or Novartis, there is a growing stream of relatively unknown «corporate immigrants» that are keen to take advantage of low taxes and other benefits. Since 2003 some 300 companies have located their headquarters in Switzerland. Many are active in social and environmental high-risk areas such as mining and commodity trading.
Risk to reputation
Whether long established or immigrant, these multinationals are no saints. They quite often generate negative headlines, owing to their violations of human or workers’ rights or environmental pollution in countries of the South. Mostly to improve their image many adorn themselves with ethical guidelines and codes of conduct on environmental and social corporate responsibility. Or they have signed on to the ten principles of the UN Global Compact. But none of that stops a Glencore from polluting waters in the DR Congo. Nor does it prevent Triumph from disregarding union rights in Thailand or stop Syngenta from endangering people in the South with pesticides that are banned in Europe.
The strong presence of international companies entails both risk and responsibility for Switzerland. If these companies violate human rights, environmental standards or other norms, it is the whole country that is shown in a bad light (see the case of UBS in the USA). It undermines the credibility of Swiss foreign policy, to which the protection of human rights is central. At the media conference to launch the «Corporate Justice» campaign, former Senator and Council of Europe member Dick Marty put it this way: «Swissness stands not only for a stable economy and attractive tax conditions but also for respect for human rights.»
John Ruggie, former UN Special Representative for Business and Human Rights, states expressly in his frame of reference that States have the duty also to protect against human rights abuses by companies and to provide victims with greater access to effective remedy.
Contradictions and fragmentation
Like all countries, Switzerland too must implement Ruggie’s concept. The UN Human Rights Council adopted the relevant Guiding Principles in June 2011. This is a real challenge for Switzerland considering that its current business and human rights policy is insubstantial and incoherent. Its activities are fragmented and are being followed up by several agencies with different agendas and priorities. For Political Affairs Division IV of the Department of Foreign Affairs («Human Security»), human rights are paramount and should be promoted consistently. The State Secretariat for Economic Affairs (Seco) sees itself as representing the interests of business and shuns binding rules like the plague. The Swiss Agency for Development and Cooperation (SDC) would like to strengthen cooperation with international companies, though it has so far not formulated any clear social and environmental criteria.
Voluntary rules as sacrosanct
It would be wrong to level a blanket accusation at Switzerland claiming lack of commitment. The country has strongly supported the work of the UN Special Representative, both financially and in terms of personnel. It participates actively in several international initiatives designed to foster corporate social responsibility, especially with regard to commodities. Some examples are the UN Global Compact, the Extractive Industries Transparency Initiative (EITI) or the Voluntary Principles on Security and Human Rights in the commodities and energy sector. The problem is that all these initiatives are voluntary and legally non-binding. They are not sufficient to effectively prevent human rights violations or environmental degradation by companies. They do not enable victims to get access to remedy.
Switzerland’s international human rights commitment is not translated into its economic policy. Freedom of trade and commerce always takes precedence. This is evident for example from the revision of the OECD Guidelines for Multinational Enterprises, which was completed last May and which the business community likes to invoke. As the responsible entity in Switzerland, Seco has indeed agreed to a new chapter on human rights. It nevertheless refused to give teeth to the guidelines and to make their implementation more binding and effective. Unlike countries such as Britain or Holland, Seco opposes recording whether a company has breached the guidelines or not upon completion of a complaint procedure, and this even if a company refuses to participate in a mediation process.
Switzerland's policy is clear: certainly no mandatory provisions, certainly no corporate accountability. This attitude also runs through the answers given by the Swiss Government in recent years to questions from the Parliament. Alliance Sud has analyzed them. Of the roughly 85 parliamentary questions submitted over the past 15 years with a view to holding enterprises more strongly to human rights, environmental protection and more socially responsible behaviour, only very few were remitted. The Federal Council rejected most of them with arguments like «Will cause competitive disadvantages», «Switzerland should wait and see what other countries do», «Swiss corporations are already doing a lot».
Lack of vision
Unlike the European Union and countries like Denmark, Norway, Holland, Germany and Canada, Switzerland has no overall policy strategy in the realm of business and human rights. The only official document is a dry, very generally worded paper by Seco on corporate social responsibility. Above all it defends the principle of voluntary self-regulation by enterprises and emphasizes that the State has no more than a supporting role to play. Besides, it makes only scant reference to human rights.
Switzerland is thus still a far way from implementing the Ruggie principles endorsed by the UN Human Rights Council. The Council views worldwide respect for human rights by enterprises not merely as a matter of good will, but as a responsibility on their part to which the State must hold them proactively.
For Switzerland this means two things. First, it must finally formulate an overall strategy for consistently holding enterprises to their human rights and environmental responsibilities. It needs clear guidelines on how to proceed in the event of conflicts between human rights and economic interests. This could make for better coordination and greater coherence in carrying out activities that are spread across various offices and departments.
Secondly, legal provisions are needed to implement the Guiding Principles of the UN Human Rights Council (see Corporate Justice petition). Today, company group managers in Switzerland bear no liability for any breaches committed by their subsidiaries abroad. Claude Wild, Head of Political Affairs Division IV of the Federal Department of Foreign Affairs is critical of this: «While parent companies benefit from the revenues of their subsidiaries, they cannot be held liable for breaches by those subsidiaries. Parent companies must take responsibility for their subsidiaries, and precisely in the commodities sector» (Fastenopfer Info 3/2011).
A matter of political will
Ultimately, clear and binding regulations for multinationals are a matter of political will. Even the Swiss Government is open to them, irrespective of freedom of trade and commerce, in cases where it sees the risk to Switzerland’s reputation as too high. There was a swift response in the federal parliament building to the stir caused last year by news that the controversial private security firm Aegis Defence Services had set up shop in Basel. In the autumn, the Government submitted for consultation a draft law bill to regulate private security firms; it even wants to ban the participation of such companies in armed conflicts abroad. Why should this approach not be possible also in other industries where companies jeopardize human rights and the environment just as seriously?
At the media conference to launch the «Corporate Justice» campaign, Dick Marty pointed out that clear and binding rules for the observance of human rights and environmental standards are of benefit to everyone: the people affected locally, where the government is unwilling or unable to adequately protect human rights; companies, which can operate within a frame of reference that is clear to all and be better able to safeguard their reputation; and finally, Switzerland as a country, as it could thus avoid falling into disrepute as a haven for dubious multinational corporations. «For once it could set the example instead of always acting in response to events and developments in other countries.»
Clear Rules for Swiss corporations. Worldwide.
The «Corporate Justice» campaign was launched in early November and is being supported by over 50 development and human rights organizations, women's and environmental associations, trade unions and church groups, shareholder associations, as well as a pension fund. Alliance Sud acts as the secretariat.
Corporate Justice is calling for clear rules for Swiss corporations – worldwide. The Swiss Government and Parliament should put in place binding regulations to ensure that corporations headquartered in Switzerland observe human rights and environmental standards worldwide. Corporations should be bound by a duty of care to ensure that neither they nor their subsidiaries or suppliers act in breach of human rights or environmental standards.
Swiss policy currently relies on voluntary measures by companies. And Swiss law treats the parent company here and its branches abroad as separate legal entities. To put it plainly, if a company controlled by Glencore in the Congo violates human rights or environmental standards, the victims cannot hold the parent company in Switzerland liable. «Corporate Justice» wants to change this. Support the campaign and sign the petition at www.corporatejustice.ch.