Swiss RBI-Counterproposal: What companies need to know
What companies need to know about the counter-proposal to the Responsible Business Initiative
After the NO to the Responsible Business Initiative (RBI) in Switzerland in 2020, the parliamentary counter-proposal entered into force in January 2022. What does this new regulation mean for companies in Switzerland? We have compiled the most important questions and answers for you below.
What is the implementation timeline?
The Parliament’s indirect counter-proposal to the responsible business initiative has been implemented by the Federal Council. The implementing ordinance and its explanatory report, which clarify the open details of the new due diligence obligations, were published in December 2021. The new legal requirements entered into force in January 2022. After a one-year transition period, the new obligations will apply for the first time in the business year of 2023, with first reports being published in early 2024.
What is required of companies?
As part of their reporting obligations, companies are required to report annually on non-financial concerns in the areas of the environment (especially CO2-targets), social affairs, labour rights, human rights and corruption.
As part of the due diligence and reporting requirements on conflict minerals and child labour, companies are required to implement a comprehensive management system for due diligence and to report annually. In principle, the due diligence and reporting requirements cover the whole upstream supply chain, including own operations and the operations of all other economic actors involved from raw material production to the processing of the end product.
What are potential sanctions?
Failure to comply with the obligation to report non-financial information, conflict minerals and child labour may result in a fine of up to CHF 100’000.
What is the new non-financial reporting obligation?
The reporting obligation requires the company’s highest management or administrative body to account for and annually report on non-financial aspects of business activities. The following elements should be included:
Description of the business model and value chain
Information on the concepts pursued (strategies, measures, processes) including the due diligence applied
Presentation of measures and evaluation of their effectiveness
Description of material risks caused by own operations, business partners, products and services along the value chain
Information on non-financial performance indicators
A waiver to report on certain elements is permitted, but must be clearly explained and justified ("comply or explain")
What is due diligence?
In simple terms, due diligence is a six-step process to assess risks and impacts, take appropriate action and report on them. We recommend that companies ask themselves the following questions during implementation according to international standards:
Through due diligence, companies must systematically analyse their risks along the upstream supply chain and take appropriate measures to prevent, mitigate and end negative human rights impacts. Under the new law, the companies concerned are obliged to introduce an internal system to trace back the supply chain of the products and services that were found to be related to conflict minerals and child labour.
What are the first steps for a company?
Many companies have already taken various measures and processes in connection with the requirements, for example in occupational health and safety or in the prevention of child labour. A good starting point is therefore to carry out a gap analysis to evaluate the extent to which a company meets the new legal requirements on due diligence and reporting. Based on this analysis, an effective action plan can be developed. focusright has developed a tool to assist and support companies with our expertise and practical experience.
Which companies are affected?
The reporting obligation applies to public companies and large financial institutions with at least 500 employees and a balance sheet total of more than CHF 20 million or a turnover of CHF 40 million in two consecutive financial years.
The due diligence and reporting requirements on conflict minerals apply to all companies above certain import or processing quantities of tin, tantalum, tungsten or gold (specified in appendix 1 of the implementing regulation).
The due diligence and reporting requirements on child labour apply to all companies offering products and services with a "reasonable suspicion" that they have been produced or provided using child labour. Exemptions from the due diligence and reporting requirements on child labour apply to:
SMEs: companies below two of the following values during two consecutive financial years: balance sheet of a total of CHF 30 million, turnover of CHF 40 million, 250 employees.
Companies with a low risk, which according to the “made in” declaration only procure products and services from countries classified as “Basic” in UNICEF’s Children’s Rights in the Workplace Index.
The exceptions do not apply to companies offering products or services with an obvious (confirmed) use of child labour.
Companies that fully implement international standards related to conflict minerals or child labour (specified in appendix 2 of the implementing regulation) are also exempt from the new legal requirements.
What about other companies?
In parallel to the legal developments, we also see increased pressure on companies by investors, consumers and business customers (b2b) to operate responsibly. As part of due diligence, companies directly covered by the new law will pass on duties through their supply chain. As a consequence, many companies will be indirectly affected by the increased requirements and should also prepare to deal with them.
What is child labour?
The law refers to the International Labour Organisation (ILO) definition of abusive child labour. In principle, the minimum age for the employment of minors must not be less than 15 years and work must not prevent the child from attending school. Special protective conditions apply to work which is dangerous and hazardous to health.
For more information, refer to our child labour Q&A.
What are conflict minerals?
Analogous to the EU regulation on conflict minerals, the Swiss regulation defines tin, tantalum, tungsten or gold containing minerals or metals from conflict and high-risk areas as conflict minerals.
In politically unstable areas, mineral extraction and trade can finance armed groups, promote forced labour and other human rights violations, and support corruption and money laundering.
For more information, refer to our conflict minerals Q&A and the OECD Guidelines on Conflict Minerals .
