No law is holding corporations accountable – yet
The counterproposal to the Responsible Business Initiative has been in force in Switzerland since 1 January 2022. It requires companies to submit a sustainability report. But there are no consequences for violating this law.
Things may soon be different in the EU. The European Commission adopted a proposal for an EU-wide law on due diligence in February 2022. Its aim is to ensure that companies comply with human rights and environmental standards.
This proposal is inspired by the Swiss Responsible Business Initiative but goes even further in some respects. For example, it requires a European supervisory authority to handle enforcement and ensure compliance with the directives. Moreover, it calls for corporations to be held accountable for offences committed by their suppliers.
However, the proposal has not yet passed into law. The European Council, Parliament and Commission need to debate the draft, amend it and ultimately jointly adopt it. This is where things get difficult.
The Council, composed of ministers from the EU member states, announced its proposed amendments to the future law on 1 December. These amendments create loopholes in the law that allow companies to evade legal responsibility for clear misconduct. For example, the Council proposes that, in future, EU member states should be able to decide individually whether or not the financial sector will fall under the new law. Furthermore, companies that produce pesticides will not be held liable for any damages caused by their products.
The Trialogue, in which the European Parliament, Council and Commission will determine the final legislative text, is due to begin in the spring. This agreement process is expected to take three to six months, depending on how quickly the three institutions can come to an agreement.