New due diligence requirements for companies
From January 1, 2022, new regulations for better protection of people and the environment will come into force. The new due diligence requirements for companies are based on the EU regulations and in some cases go beyond them.
On November 29, 2020, the popular initiative "For responsible companies - to protect people and the environment" was rejected at the ballot box. This means that the indirect counter-proposal of the parliament will be adopted. In particular, it does not include an additional liability provision as envisaged by the initiative. According to the Federal Council, this is internationally coordinated legislation that is primarily based on the regulations currently in force in the EU.
Two important innovations
The new provisions in the Swiss Code of Obligations (CO) provide for two important innovations: First, large Swiss companies will be legally required to report on the risks of their business activities in the areas of the environment, social concerns, employee concerns, human rights and the fight against corruption, as well as on the measures taken against these risks, thereby creating transparency. Secondly, companies with risks in the sensitive areas of child labor and so-called conflict minerals must comply with special and far-reaching due diligence and reporting obligations. The Federal Council has regulated the details of these specific obligations at the ordinance level.
Adjustments based on the consultation results
As expected, the feedback from the consultation on the ordinance was controversial, writes the Federal Council in its press release. There were calls for the ordinance to be tightened up as well as relaxed. The Federal Council is convinced that the ordinance adopted today, based on the results of the consultation, takes the various interests of society and the economy into account in the best possible way. It was not possible to include in the ordinance those demands that go beyond the law passed by parliament, according to the statement.
The "Ordinance on Due Diligence and Transparency Regarding Minerals and Metals from Conflict Areas and Child Labor" (VSoTr, cf. vsotr (2)) specifies which companies must comply with the new due diligence requirements. Analogous to the corresponding EU directive, the VSoTr determines the import and processing quantities for minerals and metals up to which a company is exempt from the due diligence and reporting obligations regarding conflict minerals. The defined threshold values could be adjusted at any time to any EU developments. In the area of child labor, the Federal Council has decided, based on the results of the consultation, to tighten up the rules in the sense of a catch-all provision for proven cases: Accordingly, SMEs would also fall under the due diligence and reporting obligation if they offered products or services that were obviously manufactured using child labor. With the regulation on child labor, Switzerland is going a step further than the EU, which has so far only known specific due diligence obligations for the area of so-called conflict minerals.
Finally, the ordinance specifies the individual due diligence obligations and lists the relevant internationally recognized regulations.
Due diligence requirements to be applied for the first time in 2023
The new provisions in the OR and the VSoTr will come into force on January 1, 2022. The law grants companies one year to adjust to the new obligations. They will therefore apply for the first time in the 2023 financial year.
Source: Confederation
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