The Responsible Business Initiative: help or hindrance?
By Reto Savoia, CEO
Though the relationship between Swiss companies and NGOs has not always been harmonious, nowadays, they work together successfully in a variety of different ways in developing countries. The popular political initiative ‘Responsible Business’ – a radical measure currently being debated in Swiss parliament – however puts this collaboration at risk. The proponents of this motion should put aside their general suspicion of businesses and welcome a reasoned counter-proposal.
This article was published in Handelszeitung on 19 April 2018
In today’s world, businesses are increasingly subjected to public scrutiny. What used to be negotiated and agreed upon behind closed doors is nowadays much more visible. Such unprecedented transparency opens up a much wider dialogue about actions and decisions taken by corporations. And this is good development. I do not know of any executives who would want to go back to the old days and ways. All-round transparency may well sometimes demand increased effort, but it does encourage broad discussion and thus help us reach better decisions.
The EU and the UN in the lead
This development needs to go further, though. The EU now obligates certain listed companies to report their performance transparently in economic, social and environmental terms. They must also highlight where there are problems and what prospects there are for improvement. The guidelines on sustainable development from the UN go beyond the EU regulations: They do not only protect human rights, but even define a right to compensation e.g. for workers in the event of a calamity.
The Responsible Business Initiative though goes even further than that – too far. It casts a general doubt over firms’ motives for activities overseas. Those who draw assumptions that exploitation (e.g. of people or nature) and malicious intent is the first and foremost motif of most companies, simply have no basis in reality. Of course, as with all human endeavours, there will always be some outliers whose intentions are not so benign. But to tar all organisations with the same brush - to assume guilt without probable cause - risks missing out on a lot of good. The majority of Swiss firms take their responsibility for the protection of human life and the environment very seriously.
Working together with NGOs
In the past, organisations concerned with environmental protection and human rights have run highly accusatory, hard-hitting campaigns. They held firms accountable for unscrupulous behaviour, invoking forceful legal action against them. Sometimes correctly so. Now, we see that the majority of NGOs have shifted their focus towards mutual respect and constructive dialogue. This strategy seems to be more fruitful for all sides. There are many places where corporates and NGOs work together – to improve living conditions for workers on banana plantations, to monitor and prevent child labour in the textiles sector, or to limit damage to the environment resulting from the quarrying of raw materials. However, the mutual trust built up between NGOs and Swiss businesses over the last couple of decades is being needlessly jeopardised by the Responsible Business Initiative. Why? Because it seeks to make Swiss businesses’ adherence to human rights and environment standards enforceable by a court of law, regardless of where in the world such laws are being broken.
This represents a huge risk for businesses and will open up discussions and debates about whether it is worth the cost and potential implications of entering problematic countries – and may put off the expansion into new markets altogether until all the legal questions have been settled, and all levels of suppliers have been fully investigated. This does not help the people who live in developing countries. In my eyes, companies have to cooperate even more with local partners and NGOs. And corporate disputes in Swiss courtrooms do not improve lives overseas.
Reaching out for an indirect counter-proposal
Discussions are underway in the parliamentary committees with the aim of negotiating an indirect counter-proposal. Any such counter-proposal must take the business world's concerns about liability seriously. It should also enable the initiative's supporters the option to withdraw it without losing face, and ultimately enable Switzerland find a for all sides fruitful regulatory arrangement that is aligned to international standards.
The initiative's backers should abandon their confrontational stance, and more specifically, ditch their demand for the reversal of evidence. Firms must not be presumed guilty until proven innocent, but rather the contrary. Audit firms can and should deliver a relevant contribution to developing alternative solutions for quality assurance and legal certainty for companies, NGOs and regulatory authorities.
I do hope those members of the initiative committee who seek a politically realistic and rational solution will prevail over their more radical colleagues. What ultimately matters is the creation of an economy with long-term sustainability from which everyone profits.