Plan to Hold Corporations Liable for Violations Abroad Fails in Switzerland

ZURICH — A proposal in Switzerland to make multinational companies headquartered in the country liable for human rights violations and environmental damage committed by their subsidiaries abroad failed in a referendum on Sunday.

The initiative won a narrow majority among voters, with 50.7 percent backing it, but failed because a majority of the country’s cantons, or states, rejected it. Under the Swiss system, because the initiative proposed a constitutional amendment, it needed the backing of both a popular majority and a majority of cantons to pass.

The initiative, promoted by a coalition of over 130 civil society organizations, had faced strong opposition from the business sector and the government, which feared that the rules would hurt Swiss companies amid an economic slowdown linked to the coronavirus pandemic.

With the initiative rejected, milder legislation put forward by the government is expected to come into effect. That legislation also includes due diligence and reporting requirements, but stops short of holding Swiss parent companies liable for rights violations and environmental damage that occur abroad.

The law, which is expected to come into force within the next two years, is weaker than those in some other European nations. Britain and France are among the countries that have passed liability laws linked to corporate social responsibility.

The vote on Sunday had been the source of much debate in Switzerland, and was the most expensive in the country’s history, according to the Swiss newspaper Tages-Anzeiger.

The initiative’s backers in Switzerland had targeted the commodity trading industry as a particular area of concern. The sector has a strong presence in Switzerland, employing 35,000 people.

But as day of the referendum grew closer, the business sector intensified its opposition to the proposed legislation. A number of executives at multinationals spoke out against it, and companies took out full-page advertisements in Swiss newspapers urging people to reject the proposal.

Separately on Sunday, an initiative on the financing of weapon manufacturers also failed. The proposal would have prevented Swiss institutions, including the central bank, from investing in companies generating more than 5 percent of their revenue from the production of war materials.

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