After the rejection of the Konzernverantwortungsinitiative: Evaluation of the impacts

After the rejection of the Konzernverantwortungsinitiative: Evaluation of the impacts

We support you in the implementation of your reporting and the fulfilling of your due diligence obligations with our extensive experience in reporting and the integration of due diligence along the supply chain.

On November 29, the Ständemehr (cantonal majority) decided against the Konzernverantwortungsinitiative (Corporate Responsibility Initiative). Despite a slight majority of 50.7% of the Swiss voters, the initiative was thus rejected. If no referendum is called within the 100-day period, the indirect counter-proposal of the parliament will automatically come into force. More details on the entry into force and the transitional provisions for companies is expected in 2021.

What effects are to be expected for companies?
In the future, Swiss public companies and large financial institutions will be legally obliged to report annually on non-financial issues in the areas of environment, social affairs, labor, human rights and corruption. This corresponds to a legal reporting obligation on non-financial issues in line with the „Non-Financial Reporting Directive (NFRD)” of the EU. Affected are companies with at least 500 employees, which have achieved either a balance sheet total of CHF 20 million or a revenue of CHF 40 million in two consecutive financial years.

In addition, a due diligence and reporting obligation applies to companies that operate in the field of metals and minerals from conflict regions (“conflict minerals”) or that offer products or services where child labor is suspected in the manufacturing process. In case of intentional or negligent violation of the reporting obligation on non-financial information, companies are liable to a fine of up to CHF 100,000.

How can the new reporting requirements be met?
According to the counter-proposal companies need to disclose information on environmental, social, labor and human rights issues, and the fight against corruption, e.g.:

- a description of the business model,
- a description of the concepts pursued, including the applied due diligence,
- measures taken to implement the concepts and evaluate their effectiveness,
- identified material risks (including those caused by business partners in the supply chain and classified as relevant), and how to manage them,
- and key performance indicators (KPIs).

Companies have the choice to apply a national, European or international reporting standard or to refer to international guidelines. If a standard or guideline is applied, all requirements from the indirect counter-proposal must be covered and the applied set of rules have to be publicly communicated. In addition, affected companies must report on their activities to meet the due diligence requirements. A good reporting solution should therefore be able to cover not only non-financial issues but also transparency requirements regarding conflict minerals and child labor. 

Our experience in the field of reporting: For more than 20 years, BSD Consulting has been assisting corporations, established medium-sized companies and SME’s with sustainability reporting and the implementation of tailor-made communication strategies for the development of a sustainable corporate culture. We accompany our clients along the entire path of sustainability reporting: from concept development, data collection to the final sustainability report. According to your wishes, the report can be designed as an online report, a stand-alone print report or can be integrated in the annual report (Integrated Report). In doing so, we take into account the expectations of the stakeholders as well as relevant reporting standards and guidelines. 

How can the new due diligence requirements be met?
In order to fulfill the corporate due diligence obligation, it is necessary to establish an appropriate management system. This should include a supply chain policy for conflict minerals and for products and services where child labor is suspected, as well as proof of a supply chain traceability system in these areas. This also includes approaches to identify, assess and minimize risks, as well as the preparation of a risk management plan. Compliance with the due diligence requirements in the area of conflict minerals must be verified by an independent expert.

The systematic approach can be based on the OECD Guidelines for Corporate Due Diligence. The guidelines include six steps:

1. Anchoring responsible corporate action in strategies and management systems
2. Determine and evaluate actual and potential adverse impacts related to the company’s business, products or services
3. Eliminate, avoid and reduce negative impacts
4. Follow up implementation and results
5. Communicate how you handle these effects
6. Compensate where appropriate or cooperate

Our experience regarding due diligence: Since 2018 BSD Consulting is part of the ELEVATE Group, a leading service provider in the field of sustainability and the establishment of sustainable supply chains worldwide. Together we operate in over one hundred countries with more than 500 experts. Our experience from hundreds of supply chain related projects shows how crucial transparency and reliable supplier relationships are for setting up sustainable supply chains. We support companies in the analysis and implementation of their management system with respect to corporate due diligence. As a part of it, we have developed an approach for effective due diligence through data-driven risk analysis. With this solution we help companies to identify key risks for negative impacts. The identification of risks provides a basis for the development of tailor-made measures to meet the due diligence requirements.

The indirect counter-proposal to the rejected Konzernverantwortungsinitiative (Corporate Responsibility Initiative) requires companies to adopt responsible business practices through a reporting obligation, as well as a due diligence obligation for certain exposed companies. We help you to meet these new requirements with suitable solutions that have been tested in numerous customer projects.