A popular Swiss plebiscite that would hold companies in the country liable for human rights and environmental violations is making many of the nation’s business leaders sweat—especially the oil traders.
The Responsible Business Initiative is the latest in a string of proposals aimed at enforcing higher ethical standards in the Swiss business sector. If it passes November 29, it could see companies like oil trading and mining giant Glencore Plc being “taken to court by aggrieved foreign parties,” reports Bloomberg.
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For Florence Schurch, secretary general of the Swiss Trading and Shipping Association (STSA), the proposal goes “way too far” in its reach. “You can sue a company and then it’s the company that has to prove its innocence,” she told Bloomberg.
One of STSA’s members, Vitol Group, pled guilty in 2007 “for paying kickbacks to the Iraqi government in connection with the United Nations oil-for-food scandal,” notes Bloomberg. For its part, STSA says that commodity traders who “handle about a third of the global oil trade, including an estimated 75% of Russian oil,” are “a key pillar” of the Swiss economy, “generating 35,000 jobs and a big chunk of budgets in Geneva and Zug.”
Saying the initiative will make Swiss companies liable for the failures of foreign subsidiaries and suppliers, Switzerland’s federal government is also opposing the plebiscite, offering as a counterproposal a more moderate measure (which STSA supports) “that will establish a reporting requirement for publicly-owned companies and large financial institutions, but won’t allow them to be taken to court in Switzerland.”
Other recent plebiscites seeking to rein in the Swiss corporate sector have included “a reform of the tax code and limits on executive compensation,” Bloomberg writes, both of which would “risk lessening the country’s appeal as a base” to do business.
