How Switzerland is Keeping Up with Global Standards
What is the Responsible Business Initiative (RBI)?
The Responsible Business Initiative (RBI) was launched in 2015 to require international operating companies as well as SMEs to identify, prevent and mitigate their adverse impact on both human rights and the environment. The initiative was to be enforced by a specific civil liability regime in regard to damages caused by foreign companies in their value chain. The vote took place on November 29th and despite gaining 50.7% of the popular vote, the RBI was rejected due to the majority of canton’s voting against it. A majority of both the popular and cantonal vote is needed for an initiative to pass.
An indirect counter-proposal automatically came into force as a consequence of the rejection. It requires large Swiss public companies to issue non-financial reports in line with the current EU CSR Directive and also requires companies with child labour accusations to perform due diligence. The counter proposal does not have a liability clause as was the case with the initiative.
Many companies will be exempt from the non-financial reporting based on their capital market orientation. Large companies that have issued neither shares or bonds will not be obliged to report on non-financial activities.
Another exception is the size of the company. As this new legislation is aimed at larger companies with over 500 employees, small and medium sized companies will not be obliged to report on non-financial activities. However, financial institutions will be subject to reporting requirements, irrespective of their capital market orientation. Simply put, anyone who operates with other people's money is obliged to be more transparent.
These new transparency rules will apply for the first time in the 2023 financial year and the first non-financial reports required by law will be due in 2024. This will help stakeholders gain an understanding on how companies handle environmental, social and employee matters as well as human rights and anti-corruption measures.
Although the RBI was rejected, the implementation of the indirect counterproposal obliges Swiss companies to be more transparent about their own sustainability activities. More than half of the Swiss population voted in favour of the initial proposal, which means that it’s only a matter of time until stricter sustainability policies are introduced in Switzerland.