Voters last month rejected a proposal to ban speculation in food products but not as overwhelmingly as had been expected. Another people's initiative dubbed “For Responsible Business” is now directly aimed against the commodities sector which has a strong presence in Switzerland and is regularly targeted by civil society organisations.This content was published on March 17, 2016 - 11:00
“The business world has realised how unpopular it is. It will need to work hard to improve its image,” the Le Temps newspaper wrote the day after the Feb 28 vote initiated by the Young Socialists. They had hoped to outlaw financial instruments that allow speculation in food products.
The text may have been rejected but more than 40% of citizens put a “yes” slip into ballot boxes although experts had forecast 25-30% of yes votes at most, given the topic.
“This is a good result for an idealistic, left-wing initiative,” gloated Jo Lang, a leading member of the Green Party. Others have even spoken of “critical success”.
The left had banks and investment funds in their crosshairs but also commodities traders.
Switzerland is home to about 500 companies specialising in this field, all business lines combined, including giants such as Glencore-Xstrata, Cargill, Vitol and Trafigura. They employ about 10,000 people and contribute nearly 4% of the country's GDP. That is more than the tourism industry.
Multinationals dealing in that much-maligned trade may have cleared one democratic hurdle but they are now bracing themselves for more ballots.
In canton Geneva, widely considered a business mecca, the repeal of the special tax status accorded foreign multinationals, which will lead to general corporate tax cuts, will most certainly be challenged in public vote.
A major debate on the contribution these firms make to the common good will take place, and who knows what the outcome will be.
Less radical initiative
At the national level, another initiative, aimed at “responsible business”, is on track. The text was launched in 2015 by more than 70 civil society organisations in a bid to write binding rules into law to ensure that Swiss companies respect human and environment rights in the course of their activities abroad.
The most disputed point of the initiative concerns the liability of these companies before Swiss courts for offences committed by their subsidiaries abroad.
This initiative is less radical than the one presented by the Young Socialists but a majority of voters may well fall for it, says Florian Wettstein, a lecturer in corporate ethics at the University of St Gallen and a member of the initiative committeeExternal link.
“The business community is still putting up resistance to restrictive measures but there is a major shift in the way ordinary people think. Many believe that these multinationals have a duty to respect basic rights wherever they operate in the world.”
The initiative is aimed at all those companies with headquarters in Switzerland, and there are many: the country hosts the highest concentration of multinationals anywhere in the world, making it a prominent player in several sensitive sectors such as pharma and agrochemicals.
Still, the commodities sector, which is over-exposed by the very nature of its activities in developing countries, is the top target of non-governmental organisations (NGOs).
It has tried to be more transparent over the past few years but it remains “very secretive and very opaque, partly because a large number of companies dealing in this trade are small and not listed on an exchange market,” Wettstein says.
As for citizens, they have few direct levers for action since these firms never come into contact with end consumers.
Hence the adoption of a new strategy by NGOs: they are no longer content with acting as whistleblowers and now approach the political arena directly through petitions or at a parliamentary level.
If need be also by using direct democracy tools.
Representatives for the industry, which is still little known in Switzerland, have been feeling the heat.
“Our sector is facing worsening general terms as well as uncertainty to do with new legislation and people's initiatives which may affect investments in the country,” says Stéphane Graber, secretary general of the Swiss Trading and Shipping Association (STSA)External link, the sector's umbrella organisation.
The STSA is reluctant to comment on an initiative which is still at the signature collection stage but it has issues with “extraterritorial application of the law, which is not the tradition of Switzerland,” Graber says.
A threat is looming between the lines: delocalisation to less scrupulous places such as Singapore, another booming business hub which has been wooing companies based in Switzerland.
Wettstein finds this particularly irritating.
“These companies say they are not here only to take advantage of tax benefits and nominal regulations but also because of political stability, proximity to major banks and the large qualified manpower they find here. Yet every time we want to put an end to their tax breaks or we demand more restrictive rules, they threaten to leave.”
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