Swiss vote targets multinational firms

Swiss multinationals could soon face lawsuits at home on claims of environmental damage or human rights abuses anywhere in their vast global networks.

That’s if an initiative to radically boost corporate accountability succeeds in a vote set for the country Sunday. If passed — and the latest polls indicate a slim majority in favor of the proposal — the Swiss government would be required to draft legislation to realize the socalled Responsible Business Initiative that it opposes.

The prospect of scrutiny in a Swiss courtroom over accusations of child labor in the cocoa bean supply chain in Africa or mining pollution in South America has some local companies alarmed. The wealthy country has a low tax, light-touch regulatory system that makes it attractive as a base for commodity traders and other companies.

“A yes would be a landmark event as Switzerland has historically had a very business-friendly legal landscape,” said Alain Oberhuber, an analyst at Stifel in Zurich who covers Nestle SA and chocolate maker Barry Callebaut AG.

The initiative is limited to civil lawsuits and doesn’t allow for companies to be sued for criminal negligence over their operations abroad.

Much legal wriggle room remains, and conservative parliamentarians would likely seek to dilute the proposal. The initiative also includes a clause that would limit liability if a company can prove it has taken steps to secure the rights of workers and protect the environment.

But just what constitutes enough due diligence is one of the key arguments still left open. Legal uncertainty plus the prospect of invasive scrutiny is what has produced a near-unanimous response against the initiative by corporate lobby groups.