For a few months now, orange flags with “Yes!” Have been printed. They hung up Swiss on balconies and encouraged the public to vote on Sunday for an initiative that would make Swiss companies liable for human rights violations and environmental damage to their subsidiaries abroad.

The proposal, which was backed by a coalition of over 130 civil society organizations, was rejected by both companies and the government. It goes too far and could harm Swiss companies as they grapple with a coronavirus-related slowdown.

If the initiative is approved, companies must ensure that their subsidiaries and supply chains comply with United Nations human rights guidelines and a number of international environmental standards. You would also need to report publicly about potential risks, e.g. For example, suppliers cannot verify the safety of factory buildings or the use of child labor and what measures are being taken to address these risks.

The initiative would make Switzerland-based companies liable for violations by companies and subsidiaries they control abroad and enable victims to bring their cases to Swiss courts.

The law, approved by voters according to recent newspaper polls, could have an impact on the large number of multinational companies that have their global headquarters in Switzerland.

If voters reject the initiative, more lenient government legislation will come into effect. According to this law, companies would have to monitor their international activities more closely and introduce a new reporting obligation without making the Swiss parent company liable for violations abroad.

The referendum was discussed a lot in Switzerland and, according to the Schweizer Tages-Anzeiger, is the most expensive in the history of the country.

The groups behind the initiative, whose campaign used advertising depicting alleged victims of the activities of Swiss companies abroad, received great support across the country, including from the Church.

In the run-up to the vote, the opponents intensified their activities. Executives from a number of multinational corporations have opposed the proposal, and companies that run full-page advertisements in Swiss newspapers are asking people to vote no.

The CEO of the food and beverage giant Nestlé, Mark Schneider, told the Swiss financial newspaper Handelszeitung that the company stands for human rights and environmental protection, but does not agree to the initiative in its current format.

“We think the way in which the initiative wants to implement these goals is wrong and counterproductive,” said Schneider.

Andreas Missbach, the joint managing director of Public Eye, a human rights organization that is one of the supporters of the initiative, said the goal is to prevent human rights violations and environmental damage by Swiss multinational companies abroad.

Mr Missbach says many Swiss multinational companies have tried to do the right thing by reviewing their supply chains, but abuses related to their own businesses, such as unsafe working conditions and oil spills were still occurring. He named the commodities trading sector as a problem area.

Some of the world’s largest commodity trading companies are based in Switzerland, including Glencore, a producer and marketer of metals, minerals, coal and oil that was a particular target of the initiative’s supporters. According to Glencore, the company operates in accordance with international standards and allegations of abuses such as the use of child labor at the Porco mine in Bolivia are false.

Mr Missbach is of the opinion that the initiative has generated a lot of resistance because it goes against the traditional hands-off approach of Switzerland.

“In Switzerland, companies can traditionally do what they want without regulation, but that just doesn’t correspond to the world we live in today,” he said.

The campaign against the initiative was led by the Swiss business association Economiesuisse. Erich Herzog, an executive member of the group, said a “yes” on Sunday could potentially lead to years of legal uncertainty for companies.

“We fear that this will have a negative impact on Swiss companies, but also on the countries in which Swiss companies invest,” he said. Mr Herzog said companies are likely to pull out of some countries to avoid the risk of litigation. “Should Switzerland withdraw, the gap would most likely be closed by competitors from China or Russia,” he said.

Mr Herzog said the government’s counter-proposal would still make Switzerland one of the top countries in terms of corporate social responsibility. “We are in the middle of an economic crisis, so this is not the time for experimentation that creates uncertainty,” he said.

Thomas Beschorner, director of the Institute for Business Ethics at the University of St. Gallen, said the initiative was a response to problems that had arisen with globalization. “We have an extremely globalized economy, but at the same time the law is still very much tied to a country’s territory,” he said.

Mr Beschorner said Switzerland’s previous approach to corporate social responsibility and the government’s counter-proposal had not been effective enough.

“There are indeed companies that are really committed to both social and environmental issues, but at the same time we should be much further ahead than we are today,” he said.

The voters on Sunday will also decide the fate of a second initiative to prevent Swiss institutions, including the Swiss National Bank and pension funds, from investing in arms manufacturers at home and abroad. The proposal defines a weapons manufacturer as an entity that generates more than 5 percent of its sales from manufacturing war materials, which means that companies like Boeing would also be affected.

One of the two main organizations behind the initiative is the group for Switzerland without an army, which has called numerous referendums in the past to influence the country’s security policy.

Nadia Kuhn, secretary of the pacifist group, said the initiative is focused on the financial sector, as Swiss banks manage around a quarter of the world’s transnational private assets and are currently investing billions in arms manufacturers. “We thought that there was real potential to change something here,” said Ms. Kuhn.

Recent local media polls suggest voters are likely to oppose the anti-defense investment proposal.

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