Swiss Responsible Business Initiative defeated

The run up to the 29 November referendum on the Swiss Responsible Business Initiative (RBI) witnessed a hard-fought, divisive campaign and predictions were that it would be close. 

Despite gaining popular support (50.7% of the votes), the RBI was ultimately defeated as it failed to also obtain support in a majority of the country's cantons. This apparently represented the first time in over 50 years a referendum had been defeated in such a manner. 

So what does this mean? Good question. The failure of the Responsible Business Initiative means that the counter-proposal promoted by the Council of States and adopted by the Parliament in June 2020 will become law. This version of the law applies to: (i) Swiss public companies; (ii) with 500 full-time employees (on average annually, calculated on a group basis with other group companies controlled by the parent); (iii) who meet one of two financial thresholds in two consecutive financial years (a balance sheet total of 20m Swiss Francs or turnover of 40m SFr). 

The proposal has a more limited scope than the RBI insofar as the due diligence requirement is limited to conflict minerals and child labour but still requires those caught to report on their due diligence. The key difference is the lack of liability provision in the counter proposal, with the RBI's clause allowing Swiss parent companies to be held liable in Swiss courts for damage and impacts abroad caused by subsidiaries ultimately being the source of contention that proved the downfall of the RBI.