• Théo Milliez

Initiative for Responsible Multinationals, analysis of the Federal Council's arguments

(version française ici) The Federal Council represents the executive authority in Switzerland and we naturally place a great deal of trust in them when they pronounce themselves on a subject. Confidence does not exclude control, so let's dig as objectively as possible into the arguments they put forward against the Initiative for Responsible Multinationals in the swiss voting booklet.

1. The initiative would force Switzerland to be ahead alone, whereas the counter-project intends to guarantee international coordination. Moreover, no country has rules on corporate liability that go as far as the initiative.

Similar approaches exist around the world. In France la loi sur le devoir de vigilance, in the United Kingdom modern slavery act and at the European level the study "due diligence requirements through the supply chain” shows a strong willingness to make progress on this subject. Switzerland is therefore not alone on this subject and would set an example if the initiative is adopted.

Even if Switzerland would be the first to make such a significant contribution to the protection of human rights and the environment, why should it be an argument against the initiative? If every country in the world uses this reasoning, then no progress would be possible, as all countries were waiting for the others to act first. This is an argument that would seem absurd if applied to business. It would be like saying that innovation is automatically bad and that since no other company is active in a new sector, it should be avoided so that it does not go at it alone. Like any change, whether legal through a change of text or economic through innovation, the initiative involves risks and opportunities. Switzerland has many public incentive programs for economic innovation. It is thus based on the principle that, in the field of economic innovation, the risks are well worth taking in view of the opportunities. So why not apply the same willingness to innovate in the field of the protection of life? The opportunities are also very important here, especially with the improvement of the image of Swiss companies and the reduction of social and environmental risks for Swiss companies.

2. The initiative represents an economic danger for these companies and for Swiss jobs.

Indeed, there is uncertainty as to how the multinationals will react if the YES vote prevails. If they believe that this text is a sufficient reason to relocate their headquarters, then this would result in a loss of jobs.

This argument is weak because it seems that it is not based on anything. It is a possibility whose probability is not evaluated. It is also quite possible that it is not a major issue in their eyes (many factors influence the choice of location for the headquarters of a multinational). It has the same argumentative strength as if the supporters of the initiative say that it will have a favorable impact on jobs because more companies will want to come and implement their headquarters in Switzerland because it will be an internationally recognized brand of quality. They could also say that in reality, those companies that have the possibility of not following the rules create a distortion of competition and therefore the competitive advantages they have could put jobs at the companies that are good students into question.

These are possibilities that would have to be assessed through historical, economic, survey, testimonial or other means to see how well these arguments hold up. For now, these are opinions, not solid arguments.

3. Companies could circumvent the new standards by leaving Switzerland, putting jobs and prosperity at risk in the country.

It is true that Swiss companies could relocate their headquarters if they wanted to circumvent the new standard. However, many factors influence the decision on the location of the headquarters (including the quality and availability of resources, infrastructure, stability, taxation, etc.). It is quite possible that this initiative will not be a significant enough constraint for companies to leave Switzerland. Again, this argument is weak because it seems to be just an opinion (if it is not just an opinion, the Federal Council has not given us what it is based on).

4. The counter-project is a good alternative to the initiative.

Opponents (including the Federal Council) regularly mention that they support the principle behind the initiative but that it misses its target. Therefore they must propose an alternative that, according to them, hits the target. Because at the moment it is clear that if nothing is done, some multinationals will continue not to respect international human and environmental rights.

The alternative they propose is the counter-project. So, does it hit the target of respect for international rights? In short, no. It only provides for a sanction of up to 100'000 CHF (which is a derisory amount for the multinationals that would be affected and in relation to the damage caused) if a report is not written. Multinationals could therefore continue to violate international law if they write a report mentioning this. The counter-project is therefore a bad alternative to the initiative (if the criterion is to succeed in making certain companies evolve towards greater respect for living things) and the opponents do not propose a solution that hits the target they qualify as praiseworthy.

5. Swiss companies make an important contribution to the economic development of developing countries. Obliging them to respect human rights and the environment could reduce their trade and investment activities, which would ultimately be counterproductive as it would reduce the resources they could use locally to better protect life.

The initiative concerns companies headquartered in Switzerland and with operations in other countries. If the initiative passes, the only potential risk is that these companies will change their headquarters and leave Switzerland (as previously mentioned by the Federal Council). But they will in no way reduce their activities in the other countries in which they operate. If they have decided to have their operational activities in these countries, it is for extremely solid reasons that they cannot relocate (presence of minerals, resources, cheap labor ...). Decreasing their operational activities would mean reducing their profit, which they seek to maximize.

Moreover, from an argumentative point of view, there is an inconsistency here. The Federal Council cannot tell us on the one hand that companies risk changing their headquarters if the initiative passes and on the other hand tell us a few lines further that in fact no, it is their activities in other countries that they will change and keep their headquarters in Switzerland. These two arguments exclude each other, it is either one or the other. This suggests that the Federal Council is unable to evaluate the effect that this initiative will have.

6. The initiative exposes companies to a greater risk of complaints and automatically casts suspicion on their activities.

Procedural difficulties and legal costs ensure in practice that only serious cases are taken into consideration by the courts.

Moreover, there is no reversal of the proof burden as is implied here. A person in another country wishing to bring a case before the Swiss courts would have to show that there has been damage. This is precisely how Swiss labor law currently works, where a company is automatically liable if an employee has been at fault. But it is the injured party who must prove the damage and the causal link with the company in question. The company can only get off the hook if it proves that it exercised all due diligence. This is called exonerating evidence.

7. The Swiss legal system would be overburdened.

The Federal Council itself mentions that the vast majority of companies already comply with international law. In this case, the only reason why the legal system would be overloaded would be if many people, in good or bad faith, accused multinationals of damages for which they are not responsible. In practice, these people would have to pay significant costs if they wanted to take legal action (especially if one compares Swiss legal costs with revenues in other countries) and they would have to know and navigate through complicated legal procedures. These are more than enough obstacles to screen a large number of people. This may be one of the limits of the initiative.

8. Switzerland would violate internationally recognized legal principles if it submits foreign cases to its own jurisdiction.

The initiative calls on Swiss companies to "also respect internationally recognized human rights and international environmental standards abroad". It therefore does not call for foreign cases to be submitted to Swiss jurisdiction, but for Swiss companies to respect international texts even abroad. In this argument one begins to see the logical error of the slippery slope (which consists in saying that if one authorizes A, then Z can also be authorized and therefore A must be prohibited). The initiative does not violate internationally recognized legal principles (on the contrary, it asks to apply them) and it is on this that we will vote.

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