Multinational Corporations: A Case of Impunity

An argumentation analysis on the parliamentary debate of the Swiss Business Initiative

Mirjam Hagmann

Human Rights Bachelor Thesis 15hp Spring 2020 Supervisor: Anders Melin Abstract Non-governmental organizations (NGOs) and the media are constantly drawing attention to human rights violatio ns caused by multinational corporations abroad (MNCs). Due to the lack of an adequate framework to hold corporations accountable for their corporate misconduct across borders, there is a liability gap. Extensive research has been undertaken by politic a l philosophers as well as lawyers attempting to fill the gap, leaving the question why it still exists. Currently, there is a debate in the Swiss parliament about the implementation of a constitutional law which could fill this gap. By conducting an argumentation analysis on the parliamentary debate about the Swiss Business Initiative (SBI), this thesis seeks to analyze how politicians are framing the debate, as well as what normative concerns of the academy have been discussed or left out. Finally, the paper concludes with seven findings that could be focused on more in praxis.

Keywords: Responsible Swiss Business Initiative, Human Rights, Global Justice, CSR, Multinational Corporations

Word Count: 13’703

List of Abbreviations

BoP Base of the pyramid CSR Corporate Social Responsibility GDP Gross Domestic Product GJM Global Justice Movement HRC Human Rights Council (UN) ICCPR International Covenant on Civil and Political Rights MNC Multinational Corporation NGO Non-Governmental Organiza tio n SBI Responsible Swiss Business Initiative (German: Konzernverantwortungs- initiative) SGSR United Nations Secretary-General's Special Representative UDHR Universal Declaration of Human Rights UN United Nations UNGC United Nations Global Compact UNGP United Nations Guiding Principles

Table of Contents

Abstract...... 2 List of Abbreviations ...... 3 1. INTRODUCTION ...... 5 1.1 Introduction to the topic ...... 5 1.2 Aim and Research Questions ...... 6 1.3 Relevance to Human Rights ...... 7 1.4 Theory and Method ...... 8 1.5 Delimitations ...... 8 1.6 Terminology ...... 8 2. THEORY ...... 8 2.1 Literature Review...... 8 2.2 Theoretical Framework ...... 12 2.2.1 Neoliberalism ...... 12 2.2.2 Global Justice ...... 14 2.2.3 Agents of global justice ...... 16 2.2.4 Hard Law...... 17 2.2.5 Soft Law ...... 19 2.2.6 Voluntary mechanisms...... 20 3. BACKGROUND ...... 22 3.1 The UN Guiding Principles ...... 22 3.2 Choosing Switzerland and the SBI ...... 22 4. METHOD ...... 23 4.1 Argumentation analysis...... 23 4.2 Material...... 24 4.2.1 The Federal Popular Initiative in Switzerland ...... 24 4.2.2 The parliamentary debate of the SBI ...... 24 4.2.3 Text of the Initiative...... 25 4.3 Delimitations ...... 25 5. ANALYSIS AND DISCUSSION...... 25 5.1 Argumentation analysis...... 25 5.1.1 Christa Markwalder ...... 26 5.1.2 Cédric Wermuth ...... 27 5.1.3 Regula Rytz ...... 29 5.1.4 Zanetti, Claudio ...... 31 5.1.5 Conclusion ...... 32 5.2 Application of the theoretical framework to the parliamentary debate ...... 32 5.2.1 Switzerland as an economic business location ...... 33 5.2.2 Is Corporate Social Responsibility enough?...... 34 5.2.3 International vs. State Law ...... 35 5.2.4 State Sovereignty and Extraterritoriality ...... 36 6. CONCLUSION ...... 38 6.1 Findings ...... 38 6.2 Further Research...... 39 7. REFERENCE LIST ...... 40

1. INTRODUCTION

1.1 Introduction to the topic MNCs are becoming increasingly powerful in the domains of politics and economics, holding a large percentage of the world’s capital. Additionally, MNCs began to emulate into “global webs” making their legal structures more complex than ever—commonly referred to as the corporate veil. It took a long time for the social sciences, especially that of internatio na l relations to account for MNCs and not only states when it comes to questions about global power, distribution, “justice, freedom and economic security” (Strange, 1991: 245-246). After the Second World War, a strong political will to control the market lingered in society, which was advocated by Keynes, who believed that it was the liberal project and its consequences that led to such a detrimental economic situation and therefore suggested a mixed market control by using taxes and monetary policies to counterbalance economic recessions and depressions (Guger & Walterskirchen, 1988: 103-105). It was a short run for Keynesian economics, as the society did not want to return to its interwar social order, but found comfort in the re-emerging liberal thought which was strongly driven by Reagan and Thatcher. Neoliberalism was born and made to tackle the ascending globalization by releasing state regulation and revisiting the free market. A distinction of neoliberalism to that of classical neoliberalis m is the displacement of the nation state. Neoliberalism marks the beginning of states actively participating, facilitating and ensuring a self-regulating market (Wettstein, 2009: 175). Free market economy and deregulation offered ingress for MNCs to access all parts of the world, which drove competition for low production costs. Consequently, MNCs which established their headquarters in the Global North started operating in the Global South. Activis ts, NGOs and social movements began to draw negative media attention to corporate misconduc t in the Global South, calling for corporations to be held accountable for human rights violations committed abroad. Lacking a comprehensive framework at the global level, as well as the inability of national politics to transcend borders led to a regulatory vacuum, subsequently, MNCs became political actors that shape global economics (Wettstein, 2009: 177-178). International organiza tio ns reacted by drafting soft law solutions at the inter-state level, calling on MNCs and states to realize their responsibilities towards human rights and environmental violations. In the year 2000, the UN Global compact was drafted as a first attempt to urge MNCs to take responsibility and actively promote institutions where they

5 operate. Although this received more critique than support in response, it fueled internatio na l debate on the need to regulate MNCs (Deva, 2006: 143). This debate has become entrenched in society, covering topics such as global justice, anti-neoliberalism, sovereignty as well as legal debates about regulation in hard law, soft law and voluntary mechanisms such as Corporate Social Responsibility (CSR) policies. Switzerland has one of the highest GDP per capita in the world (Swiss Economy – Facts and Figures, 2020) with the highest density of MNCs in relation to its population, drawing almost a third of its income and employment through the activities of MNCs (BfS, 2019). Currently, there are parliamentary debates happening in motion about a newly launched initiative—the responsible Swiss Business Initiative (SBI)—aiming at regulating MNCs on a constitutional level. Regulated due diligence, liability not only for headquarters, but also in the supply chain, as well as access to effective remedies for victims of human rights violatio ns would all be novelties in Swiss legislation through acceptance of the SBI (KOVI, 2015). By analyzing the political debate, this thesis seeks to delineate which theoretical concepts are discussed in parliament and which are absent.

1.2 Aim and Research Questions The aim of this thesis is to understand how the political debate about the implementation of the SBI is framed. This is of importance both academically and in practice, because Swis s MNCs are committing human rights violatio ns abroad without a legal framework to make them liable. Additionally, this thesis seeks to establish a relationship between theory and practice to delineate what normative concerns are setting the Swiss political agenda while establishing those that are being left out altogether. These correlations and divergences demonstrate which normative concepts are abundantly discussed and which could be stressed more. In order to achieve this aim, arguments of Swiss parliamentarians will by examined by conducting an argumentation analysis on the debate about the SBI.

The following two research questions will help to reach the aim: (1) How are Swiss politicians presenting arguments about the implementation of a law on constitutional level to hold MNCs accountable for their human rights violations abroad? (2) How do these arguments relate to the academic debate?

6 1.3 Relevance to Human Rights Human rights, as defined in the preamble of the Universal Declaration of Human Rights (UDHR), are intended to be promoted and protected by “every individual and organ of society” (UN General Assembly, 1948). The term “every individual” has been interpreted to include judicial persons (Henkin, 1999: 25; Baumann-Pauly & Nolan, 2016: 57). Through differe nt UN treaties, human rights duties become legally enforceable, however many problems arise when it comes to business that extends state borders. These problems that emerge are discussed in the field of Business and Human Rights, aiming at connecting ethics, justice and univers a l rights that apply to everyone that has a business. Abundant research has been undertaken in this field, especially since John Gerard Ruggie was appointed as the UN Secretary-General's Special Representative (SGSR) for Business and Human Rights (Ruggie, 2013: 39-51). Unexpectedly, the launch of the UN Global Compact (UNGC) in 2000, which is known as the worlds biggest CSR initiative, has been heavily criticized for being used as a tool by MNCs to silence NGOs and social movements (Deva, 2006: 109-110). Further, where the partnership between the UN and MNCs was seen as a win-win situatio n, it was also seen as a danger to establish a private-public relationship as the UNGC does (ibid.: 143-144). Additionally, the normative debate around granting human rights obligatio ns to corporations made a divergence, as some already perceive MNCs as quasi-governmental institutions (Wettstein, 2009), others hesitate to acknowledge MNCs to have such responsibilities as this would grant them too much power (Ruggie, 2012: 50). The drafting of the UN Guiding Principles (UNGP) managed to combine state responsibility “to protect”, MNCs’ responsibility “to respect” and more access for victims to effective remedies, urging all parties to set up a framework that implements these principles on a domestic level (UN, 2011). Such a framework for the state was drafted by a coalition of Swiss-nongovernmental organizations called the Swiss Responsible Business Initiative (SBI), which was launched in 2015, aiming at “modifying the Swiss Constitution by including a specific provision of the responsibility of companies to respect human rights and the environment” (Bueno, 2018: 1). So far, the Swiss government has only shown willingness to endorse more voluntary mechanisms, rather than regulatory measures, which the UN sees as highly problematic (Trezzini, 2019). Human Rights is therefore highly relevant to this subject, as the theory comprises of the normative and legal debate about the connection of Business and Human Rights, as well as the material which demonstrates how Swiss politicians take position to such regulatory measures.

7 1.4 Theory and Method Because no specific theory is applied in this thesis, the theory chapter consists of a literature review as well as a theoretical framework. The former seeks to identify the most relevant topics in the philosophical and legal debate about the regulation of MNCs, challenging their impunity for Human Rights violations abroad. Extracting the most relevant topics will then create a theoretical framework which can be used for the analysis. The method consists of structuring the parliamentary debate about the SBI according to the substance-oriented model in a pro et contra fashion (Boréus, 2017: 70-72), which sets the framework for relating the arguments to the scholarly debate. Two representatives for the SBI and two representatives against the SBI are selected and analyzed from the parliamentary debate about its implementation.

1.5 Delimitations Due to limited space, it was not possible to analyze the entire parliamentary debate, which is why a sample was extracted. Additionally, the previous research, as well as the theoretical framework needed to be limited which is why a choice was made of the most relevant debate. The most relevant themes were established by their frequency and emphasis by authors of previous research.

1.6 Terminology

Hard law is a legally binding law that can be enforced in court

Soft law is a non-binding agreement or principle that is usually found in the international sphere, which cannot be enforced in court, but has reputational consequences

2. THEORY As this thesis aims to uncover correspondences and discrepancies between the political debate and the parliamentary debate, it does not apply a particular theory, but uses the scholarly debate as its theoretical framework. Previous research on the regulation of MNCs will he lp identify relevant concepts and problems that scholars face, which are then structured and elaborated on in the theoretical framework.

2.1 Literature Review This section structures what has previously been contributed to this field of research in the academic world as well as what methods and theories were used to do so. Extracting the most relevant topics from this research will help construct the theoretical framework. This is a broad

8 field and the diversity in the academic debate is needed for the theoretical framework in order to identify how it correlates to the practical arguments in the parliament on how to regulate corporations. The locus of previous literature is positioned from a normative perspective as well as a legal perspective. Noticeable while conducting research on the regulation of MNCs was that the philosophical literature on the subject was mainly published between the years 1990-2010, the main reason for this being that global power distribution was primarily concerned to be between states.

“It is only when you think of power in terms of the ability to create or destroy, not order but wealth, and to influence the elements of justice and freedom as part if the value-composition of the whole system, that it becomes obvious that big business plays a central, not peripheral role” (Strange, 1991: 245).

Also, the emergence of MNCs, neoliberalism, anti-neoliberal and anti-capitalist social movements, as well as the Business and Human Rights field all ascended in the same decades, which instigated the impetus behind rethinking neoliberalism and global justice. Neoliberalism posits an important role in this debate and frequently marks the beginning of essays and books about the regulation of MNCs (see in Ruggie, 2012; see in Wettstein, 2009). Wettstein (2009) for example calls out “mains trea m economists”, that believe in neoliberalism as the best form of economy (5). Opinions frequently diverge on whether the idea of neoliberalism has progressive economic ideas, but is only implemented poorly (Rodrik, 2017: 2) or whether the resilience of neoliberalism lies in its compatible nature with diffe re nt forms of governance (Schmidt & Thatcher, 2014: 341-342). Other scholars proclaim that human rights and the new global justice movement (GJM) emerged from neoliberalism and play an important role to sustain its structural deficiencies in society (Moyn, 2014: 149-151). Roderik (2011) identifies a “trilemma” that neoliberalism causes, which is the incompatibility between “hyperglobalisation”, democracy and national sovereignty (201). Although many think that there is no way out of neolibera lis m —an infamous Thatcher slogan— there is a ris e of social movements, such as the GJM, that believe in global citizenship as an alternative to neoliberalism (Moghadan, 2012: 195). Arnold (2012) gives two reasons to why there is a lack of sufficient literature around corporate agency within the realms of global justice. First, the subject is predominantly

9 discussed by philosophers in the field of politics and international law rather than sociologists. Second, there is a difference in judgment about the agency of MNCs (127). O’Neill (2001), a political philosopher, rethinks global justice by questioning the most common understanding that a state holds primary agency towards global justice. She critic izes the UDHR, for explicitly addressing states in matters of global justice, as well as the “hidden statism” in Rawls’ approach to justice (182-188). Focusing on the power relations as well as capabilities (inspired by Sen, 1999) of non-state actors (in the dimens io ns of international organizations and MNCs), the question of agency becomes blurry when states are weak (O’Neill, 2001: 191-193). Challenging the primary agency of states opened new areas of discussion. Wettstein (2009) fo r example defends a right-based cosmopolitan view of justice in which human rights are the determinant for human development, which was previously rather neglected such as by Rawls or Kant (44-51). Where states are weak, other non-state actors must meet their obligatio ns towards human rights with their capabilities of violating them—or in other words— take responsibility towards the global injustices created by them (Arnold, 2012: 127-129). Wettstein (2009) emphasizes therefore that MNCs are not supposed to be primary agents, but they already are, as they have adopted quasi-governmental capabilities and their corresponding obligations should therefore be met (146). Some scholars refute giving MNCs human rights obligations, as there is a risk in perpetuating their power. If MNCs were to be seen as primary agents they would also be entitled to the same tools as states to fulfil these obligations (such as government and military) (Hsieh, 2015: 226; Bishop, 2012: 130). Hsieh (2004) uses Rawls’ concept of the duty of assistance, which was originally intended for strong states assisting weak states in order to identify MNCs’ responsibilities to provide a duty of assistance in countries in which they operate (646). These normative scholars mainly conducted conceptual analysis, building on or rejecting main thinkers of global justice, such as Rawls to establish a new or extended theory. Other normative research on global justice exceeds the realms of this thesis, for example that state borders already create a global injustice (see in Carens, 1987) and that only global institutions can mitigate inequalities that borders create (see in Pogge, 1994). Arnold (2012) believes that voluntary mechanisms must be improved, because rules and regulations can be ineffe ctive in states where institutions are weak, due to leaders fearing that competition will risk encouraging MNCs to move from countries where these institutions become effective to where they are still ineffec tive—whic h is called forum shopping. However, it is not to say that Global regulatory regimes could not also exist and be strengthened alongside MNCs simultaneously acting as agents of justice (128-129).

10 Normative reflections about CSR predominantly concern the share-holder value theory, the stakeholder theory and the corporate citizenship theory—all of which have been heavily criticized. Milton Friedman’s seminal work on share-holder value theory says it all: “The social responsibility of business is to increase profits” (Friedman, 1970). Due to the emerging literature on Business and Human Rights since, this strictly profit-maximizing view is outdated. Fleming & Jones (2012) critic ize the stakeholder approach as an adequate form of CSR in which MNCs communicate with their stakeholders when conducting business. Their critical stakeholder analysis is an assessment regarding the power dimensions between stakehold e r s and MNCs, revealing what bargaining position stakeholders have (70-76). Corporate citizenship theory concerns a corporation’s contribution towards society and is endorsed by scholars (Matten & Crane, 2005: 170). However, corporate citizenship is also criticized by scholars who see the danger in profit-seeking giants taking over responsibilities such as citizen rights, as this could be merely used as another tool for boosting their sustainability reports (Fleming & Jones, 2012: 58-59). There are a number of scholars that have conducted single case studies to assess how the CSR of MNCs has repeatedly been used as a strategy to deflect from human rights violatio ns abroad or silence critical NGOs (see for example Wiig & Kolstad, 2010; Benson, 2015). That being said, there are many case studies on how cooperation with MNCs and its stakeholders have had a positive effect on the society in which they operate, such as “improved security and human rights” (Perks, 2012: 259). Kirsch conducted a discourse analysis in order to evaluate how corporations use CSR language to silence their critics (see in Kirsch, 2015). Legal scholars have previously analyzed the success and deficiencies of precedent law, such as the US Alien Tort Claims Act, which was initially established to fight piracy, but used by lawyers 200 years later to seek remedy for human rights abuses committed by corporations that have “sufficiently close links to the U.S” (de Schutter, 2006: 6; Ruggie, 2013: 43). More recent research has been conducted on the French Duty of Vigilance, which was adopted by the French government in 2017 and which is very similar to the SBI (Bright, 2020: 10). Relevant to elaborate on in the theoretical framework are its successes and shortcomings. Other scholars have dissected international law as well as national law to provide possible solutio ns to the problems around sovereignty and extraterritoriality (de Schutter, 2006). This will be important for my thesis, as the SBI could possibly pose such problems, which is why it will be further discussed in the theoretical framework. Moreover, by undertaking a qualitative content analysis on the Codes of Conduct of some of the biggest MNCs, Miller notes that “only 25 percent of those companies disclose some

11 amount of supply chain monitoring and performance information” (Miller, 2015: 447). Highlighting the deficienc ies helps Miller’s reasoning that we must take a step back from international regulation and move more towards a transparency model, which makes information available publicly and changes consumer demands—meaning that the supply conditions must be adjusted (Miller, 2015: 452-463). Other scholars discuss the issues that arise with conflicting laws when it comes to the implementation of regulations against corporate misconduct abroad (see Ruggie, 2013: 40-41 for conflicting UN treaties versus state law and; see Chesterman, 2007: 315 for conflicts in national law, such as forum non conveniens). These legal contradictions will be elaborated further on in the theoretical framework, as they raise concern when states want to close the liability gap of MNCs.

2.2 Theoretical Framework The previous section focused on works that establish regulations, practices, positions of MNCs within global justice, which the theoretical framework will build upon. In order to identify concepts and philosophical theoretical ideas—or the lack thereof— about the regulation of transnational corporations in the SBI, the most important ideas have been extracted from the previous research and elaborated on. What distinguishes this thesis is that instead of making a normative case, it seeks to illustrate axiological divergences between the scholarly field and real world politics, which is why the theoretical framework remains fairly broad, but excludes outdated or irrelevant scholarly material. Identified concepts and ideas include the debate around neoliberalism, global justice and the legal implementation of regulations in to hard law and soft law.

2.2.1 Neoliberalism

Avoiding the concept of neoliberalism is impossible to do when analyzing the regula t io n of corporations for their activities abroad. World economics took a profit-maximizing course, which increased global wealth, but also inequality in the turn of the century. Wealth distribu t io n is more polarized than ever before and especially in countries where MNCs are most active, poverty, human rights violations and environmental damages are most present (Wettstein, 2009: 3-5). Although many scholars acknowledge the byproduct deficiencies of neoliberalism, “mainstream economists” (Wettstein, 2009: 5) still believe in its flourishing nature of bringing back “economic liberalism and individualism, competition and opportunity” (Dornbusch,

12 2000: 25 in Wettstein, 2009: 5). This notion of global economics echoes in utilitarianism, which does acknowledge ethics, but does not take into account global justice (Wettstein, 2009: 5). There is an interesting take on the relationship between international human rights law and neoliberalism that derives from the Marxist school of thought. It is a common belief that the emergence of international human rights law is a phenomenon arising from neolibera lis m (Moyn, 2015: 168). Their relationship is a debated one; many optimists highlight the balance between converting human rights into a sort of “toolbox of legal and other standards to guide, tame and civilize an era of transnational market liberalization that has generally improved the human condition” (ibid.: 149). However, due to human rights being implemented into international jurisdiction at its bear minimum, it fails to address the local and global damage neoliberalism has caused on equality. Rather, focus is set on human rights outcomes. Essentially, human rights have failed to keep up with “their neoliberal frère ennemi” (ibid.: 151), who’s overarching power threatens a subject that they didn’t manage to address: global equality, including resource distribution (ibid.: 148-152). Moyn (2014) concludes therefore that human rights are too minimal and basic in their essence to ascend as rapidly and ruthless ly as neoliberalism (169). Harvard professor Dani Rodrik expresses his concerns about the interplay of what he calls a “hyperglobalisation” and state politics (Rodrik, 2011: 353). It is not just the MNCs anymore that are subjected to competition, but also the state, which limits the states’ ability to act in an ethical manner, but they come under the constraint of capitalist exploitation (Ulrich, 2016: 361- 370). These constraints and contradictions between the combination of a nation-state, democracy and “hyperglobalization” is what Rodrik calls “the political trilemma of the world economy” (Rodrik, 2011: 383). As a result, Rodrik believes that only two of these three terms can be compatible with one another at the same time:

“we cannot have hyperglobalization, democracy, and national self- determination all at once. We can have at most two out of three. If we want hyperglobalization and democracy, we need to give up on the nation state. If we must keep the nation state and want hyperglobalization too, then we must forget about democracy. And if we want to combine democracy with the nation state, then it is bye-bye deep globalization” (Rodrik, 2011: 381).

13 Rodrik (2011) opts for the solution of global governance, meaning that the power of national governments would be compromised and transferred to a supra-national government, which would leave space for democracy and globalization (386). Increasingly, people believe Thatcher that there is no way out of neoliberalism, as it is resilient in its nature due to its capability to adjust to all forms of states (Schmidt & Thatcher, 2014: 341-342), but also because its underlying ideas are strong, although implemented poorly (Rodrik, 2017: 2). Wettstein (2009) argues however that it is impossible to undo globalization, but it is our moral duty to shape it in a way that promotes global justice by identifying its agents (agents of global justice will be discussed in the next section in more detail) that have the capabilities to do so (Wettstein, 2009: 8). Social movements, such as the GJM reflect the need to reshape globalization. This movement emerged around the 1990s and has become extremely important for the socio- economic debate with justice at the center of an increasingly globalizing world (Moghadam, 2013: 171). Anti-neoliberal and anti-capitalist critiques through structural adjustments is on the agenda of the GJM. Their biggest enemy, neoliberalism, “was behind the onerous Third World debt, deteriorating standards of living, and competition, conflict, and war” (ibid.: 195). Opposing the notion that there is no way out, the GJM believe that there is an alternative, an “altermondialisation” which is anchored in “international solidarity and identity construction of global citizenship ” (ibid.). Within the movement, it is suggested that in order to achieve global justice, a structural change is necessary in the form of de-globalization, hence returning to local communities. Another view is that a global democracy and global sustainable solutio ns against climate change are necessary to progress against neoliberalism (ibid.: 195-200). These ideas correspond to Rodrik’s solution of a global governance, meaning the powers of the nation state will decrease immensely (Rodrik, 2011: 386). The considerations of neoliberalism can be used as a foundation to analyze the parliamentary debate. As mentioned in the last paragraph, global justice is on the agenda of many movements against neoliberalism. Its main understandings will be presented in the next section.

2.2.2 Global Justice

As the previous section shows, theorizing global justice has changed in the past decades due to the emergence of inequalities and human rights violations fueled by the laissez-fa ire component of neoliberalism. It is widely accepted that the actions of MNCs have a direct effect

14 on global resource distribution and therefore also global justice (Wettstein, 2009: 25). Relevant for this thesis are the three levels of regulation that can be applied to MNCs: international, national and self-regulation through voluntary mechanisms by the corporations themselves. Interestingly, the question of which agents ought to take responsibility and have obligations towards global justice concern the same actors; nation states, the international arena and MNCs. Therefore, it is important to first give an account on theories of global justice before looking into the different kinds of soft and hard law regulations that exist or should exist according to scholars. John Rawls, a pioneer of global justice theory, managed to successfully dissect and point out the deficits of utilitarianism in his book A Theory of Justice. What is relevant to understand from his book for this thesis is that he criticized utilitarianism, as it only acknowledges justice, when a just distribution is the most efficient. Apart from that, utilitarianism takes into account the violation of fundamental freedoms of an individual in order to maximize the efficiency of a society. Rawls, however objects that notion, as “the rights secured by justice are not subject to political bargaining or the calculus of social interests” (Rawls, 1971: 28 in Wettstein, 2009: 6). Although this approach successfully dismantled utilitarianism, his view of justice is still considered too statist, rather than global (Wettstein, 2009: 7). Citizens of nation-states (peoples in Rawls’ language) have the primary duty to abide the laws in place and guard them against the offences of other states. Wettstein rejects Rawls notion of justice as an adequate theory of justice, as it is not human rights based, but still too utilitarian in its essence, as his principles of justice are not designed to benefit the worst-off globally, but only on a domestic level (Wettstein, 2009: 9). Pogge (1994) contributes further by rejecting Rawls’ principles of justice, as societies, as Rawls understands them, have been artificially created with borders through violence. Justice in Rawls perception does not provide the possibility for each individual to participate equally in global political decisions that affect their lives. Similarly, inequalit y prevents individuals from having equal chances at education and career (196-197). Although Rawls does not give an account on the role that MNCs play in global justic e specifically, there are scholars that have recently used his theories to explain their moral obligations toward people at the base of the pyramid (BoP) (Arnold, 2013: 131). In his book, The Law of Peoples, Rawls provides a what he calls “realistically utopian” account of local perceptions of justice extending to international law. This in turn provides an explanation to what is required of institutions in terms of justice, not only on a national, but also on an international level (Rawls, 1999: 11, 41-42). As mentioned above, international competition, neoliberalism and a globalized market has led to MNCs violating human rights and

15 environmental standards in the Global South without being held accountable. Usually, these violations happen in countries with weak institutions. Here, Rawls becomes relevant, as he also incorporates burdened societies in his theory, whose "historical, social, and economic circumstances make their achieving a well-ordered regime, whether liberal or decent, difficult if not impossible” (Rawls, 1999: 90). Strong states have a duty of assistance to enable these burdened societies to develop healthy economic institutions, until they become well-ordered (ibid.). This point of his theory is where most scholars draw the connection to MNCs that “are owned and managed by members of liberal or decent peoples and that operate in burdened societies” (Hsieh, 2004: 646). Grounded in the duty of assistance, Hsieh (2004) identifies obligations that corporations have which extend the UNGP, for example by a negative duty not to pursue operations that cause human rights violations. Especially in circumstances where the well-ordered society fails to provide such a duty of assistance, or even expresses its unwillingness to provide it, the question of the legitimacy of MNCs to provide such a duty, rises. If benefits of corporations are drawn from the state of burden of that society, its obligations to provide assistance in line and beyond the UNGP are undisputable (651). Beyond the statist view of justice, some are convinced that global justice cannot be achieved by nation-states, due to their self-interest and sovereignty (see Nagel, 2005). Supra- national authority would solve this problem (see Rodrik, 2011), however the competition over a legitima te authority to carry out this task, taking into consideration all cultures and needs would be impossible (Nagel, 2005: 145). What is the alternative? Thomas Nagel refers to history, where demands of people were shaped into institutions either by revolutions or overthrowing illegitimacy. Therefore, he sees the only way to render global justice is to establish unjust, illegitimate global structures, that only benefit the most powerful states. In this way, institutions will then have a demand of legitimacy to explore (Nagel, 2005: 145-146).

2.2.3 Agents of global justice

O’Neill distinguishes two forms of agents of global justice—primary and secondary agents. Primary agents have a controlling function, setting guidelines, legal frameworks and limitations in which secondary agents can function (O’Neill, 2001: 181; Wettstein, 2009: 155). Hence, in cosmopolitan societies, primary agents can usually be seen as governing institutio ns, exercising authority over secondary agents, which are other institutional structures and individuals (Wettstein, 2009: 155). Deriving from this, it becomes evident that states, as well

16 as supra-states are primary agents of global justice. With the increasing power that MNCs are gaining, can they merely be seen as a secondary agent? Wettstein (2009) challenges the state- centered approach of primary agency from different perspectives. There is a profound problem with states acting as the sole primary agents of justice when they themselves are “unjust or too weak to facilitate and enforce justice” (O’Neill, 2001: 182). Further, when it comes to institutions, politics and economical processes exceeding national boundaries, state sovereignty obfuscates obligations that it should fulfil in its role as a primary agent (Wettstein, 2009: 156-157). The problem of extraterritoriality will however be discussed in more depth below. Wettstein (2009) and Arnold (2013) both argue for a similar notion, namely that due to their capabilities, power and therefore agency in global justice, MNCs have direct obligations to the proactive realization of human rights, which means strengthe ning institutions in countries in which they operate (Wettstein, 2009: 153-164 & Arnold, 2013: 127). Traditional perspectives of responsibilities and agency imperil the fight against social injustices, as economics and politics have already transcended borders, but the responsibility of justice has stayed within (Young, 2004: 371). These theoretical concerns of global justice will serve as a premise to compare to the praxis. Legal issues, however, must also be included to the debate to examine the legal problems politic ia ns are facing with the implementation of the SBI.

2.2.4 Hard Law

2.2.4.1 International law There are different ways in which MNCs have been attempted to be regulated, starting off with discussing the legal personality of a MNC in international law. Chesterman (2007) presents the paradox of equalitarianism between the subjects of international law. Contrary to states, if multinational corporations fall under the scope of international law, they only have responsibilities without rights. Individuals, however, have rights without responsibilities and states have rights as well as responsibilities (309). Also Chesterman (2007) agrees with Hsieh (2015) and Bishop (2012), who both reject MNCs having moral obligations because if they do, they are entitled to have access to the same tools as the state to fulfil their theoretical obligatio ns to human rights, such as the access to military (Hsieh, 2015: 226; Bishop, 2012: 130; Chesterman, 2007: 310). International human rights law transmits binding legal obligations on to states, making it their primary responsibility to protect human rights. It could be argued that the internatio nal

17 human rights treaties as well as the UDHR are also directed towards corporations, as “every individual” could be interpreted as including judicial persons (Baumann-Pauly & Nolan, 2016: 57), however many General Comments reject the inclusion of judicial persons in their provision (Ruggie, 2013: 51).

2.2.4.2 National Law Due to the problems arising with international legal jurisdiction, the most common understanding of primary responsibility for a wrongdoing of MNCs is “the state in which the wrongdoing has occurred” (Jochnick, 1999: 65-66). Sometimes states fail to respect and ensure rights to individuals as guaranteed under the ICCPR. This is the case when the state has weak institutions in place and is unable or unwilling to prevent the wrongdoing from happening, because the MNC brings much income and wealth to the state (Chesterman, 2007: 314). Another reason for a host state to be restrictive when it comes to regulating MNCs is because of the phenomenon law shopping. This occurs when a nation implements a new law and due to the unwillingness of the MNC to adjust their policies, they find a different host state with less restrictions (Bright, 2020: 1). Then it is time to turn to another jurisdiction, one where the MNC has its headquarters (Chesterman, 2007: 314-315) Chesterman (2007) calls this jurisdiction “Home Jurisdiction” and points out its mo s t common barrier, namely the “forum non conveniens” (315), which enables courts to dismiss a case and refer it to a better suited court (ibid.). Recommendations by the Council of Europe suggest however that this law shall “not apply in transnational tort claims for alleged corporate- related human rights abuses” (AI & BHR Resource Centre, 2017: 11). Since the Nuremberg Trials after the Second World War, it became evident that individ uals could also be held accountable under international law for crimes that corporations committed. What is most contested is whether the legal persons can be trialed under international law as well. During the establishment of the International Criminal Court, the notion of holding entities accountable as well has been discussed, however dropped, as it would be “morally obtuse for States to insist on also the criminal responsibility of all entities other than themselves” (Eser, 2002: 779). In the US, many lawyers have sued corporations under the Alien Tort Statute (ATS), which allows the US federal courts to exercise jurisdiction “over any civil action brought by an alien for a tort in violatio n of international law or a U.S. treaty” (The Centre for Justice & Accountability, 2016). This statute has demonstrated itself to merely be a tool to use as a threat to sue corporations, rather than providing victims with actual remedies due to its highly

18 conditional character. Additionally, the complex structure of MNCs including their control over subsidiaries increases the difficulty of suing MNCs in the US (Baumann-Pauly & Nolan, 2016: 273, 279). A main challenge for federal courts in Europe and Canada is imple me n t in g laws into national legislation to overrule violations that have occurred abroad. In this sense, lawyers have begun to draw up alternatives, such as non-judicial grievance mechanisms (NJGMs), which were not initially intended to cover this legal gap, but rather offer a voluntary alternative. These NJGMs, however, have also shown little success when it comes to claimab le remedies (ibid.: 274).

2.2.4.3 Extraterritorial Jurisdiction Three conflicts arise according to de Schutter (2006) when adopting extraterritorial laws in order to regulate MNCs. Setting up a framework in order to establish the nationality of the MNC (1), piercing through the corporate veil (2) and lastly ensuring that the adopted legisla t io n does not undermine the sovereignty of the host-state (3) (de Schutter, 2006: 29). By seeking consent from the host-state, this last problem could be overcome (de Schutter, 2006: 8). France adopted the Duty of Vigilance Law in 2017, which is an unprecedented form of legis latio n imple me nted nationally to hold MNCs as well as subcontractors in the supply chain accountable for corporate misconduct. Especially the provision that victims can seek remedy in France, rather than a court where the damage occurred (Bright, 2020: 6). Weaknesses have shown that the law only captures a small amount of MNCs, the corporate veil has still not been able to be pierced through entirely, because “each entity forming the international group of companies is considered separately” (Bright, 2020: 8). Further, despite what critics say, the French Duty of Vigilance Law has so far not shown any competitio n problems by their MNC s(Ibid.). 2.2.5 Soft Law

2.2.5.1 UN Global Compact Chesterman (2007) discusses the establishment of the UN Global Compact (UNGC) and its indication that voluntary regulation is much preferred especially in the Global North. What is evident is that nation states from the industrialized part of the world are obsessed with deregulation (328). Orock (2013) and Deva (2006) both see the partnership with the UN as dangerous, because MNCs can use their voluntary enforcement to boost their sustainability reports by referring to their adherence (Orock, 2013: 30-35; Deva, 2006: 109-110). Orock (2013) goes further to

19 postulate that these CSR practices “have firmly established themselves as the new overarching story of how the chief agents of capitalism carry themselves in these times” (Orock, 2013: 35).

2.2.6 Voluntary mechanisms

2.2.6.1 Codes of Conduct Wawryk (2003) describes four different types of codes of conduct, highlighting problems and strengths of their enforcement. These include public, private, national and non-governmental codes of conduct. Usually, the nation-state is very reluctant to negotiate a legally binding code of conduct when it means their sovereignty is compromised in any way (328). By taking the example of Apple and different garment industries, Miller (2015) highlights that public negative media attention to the working conditions in the supply chain, has had positive outcomes in setting up private codes of conduct. as well as joining the Fair Labor Associatio n (433). Further, Miller criticizes organizations such as the International Labor Organization, as well as how legalistic language is used in private codes of conduct to avoid liability for the MNC itself, while the employees in the supply chain are legally not workers of the MNC and therefore there is no contractual obligation towards them (Miller, 2015: 452-453). Aiming at distancing from global regulation, she argues for a model of transparency, which is grounded in the thought that working conditions “in the global supply chain will improve only if information is made available, if consumer expectations change and if corporate norms shift” (ibid.: 435). The Transparency Act will include “best practices” as well as monitoring and audit mechanisms by third parties which when published – the consumer demand will adjust to these practices and create an incentive to improve working conditions in the supply chain (ibid.: 462- 463) 2.2.6.2 Corporate Social Responsibility This section will dive into the debate around corporate social responsibility, presenting its main theories as well as critiques. Because CSR as we know it is sometimes said to be “enough” to regulate corporate practices, it is relevant to highlight its main debate in this thesis. As discussed above, neoliberalism has increased the discussion about Business and Human Rights and global justice. One of the main characteristics of neoliberalism is its laissez-faire nature, which perpetuates corporations to adopt voluntary mechanisms, such as CSR policies. The share-holder value theory is grounded in such a neo-classical idea that ethics has no place in corporations, as the only goal should be to maximize profits within a legal framework

20 provided by the state. Many economists and entrepreneurs working especially in the financ ia l sector endorse this view (Friedman, 1970: 33). By attempting to “reframe the narrative of capitalism” (Freeman, Martin & Parmar, 2007: 303), the stakeholder theory provides criticism to this traditional view. By communicating with all stakeholders affected by the activities of the MNC, it will be possible to build a foundation of morality and ethics, which will then in turn take into account the rights of all groups equally (Freeman, 2010). Fleming & Jones criticize this approach by setting up a critical stakeholder analysis, which evaluates the different power structures amongst the MNC and its stakeholders. Revealing the power (im)balances in the context in which the MNC operates discloses the weak bargaining powers that are enforced through weak institutions, insufficient labor laws and low environmental standards. Additionally, most communica tio n with stakeholders is more informative than engaging, as the conversation typically happens after the business deal is signed and finalized (Fleming & Jones, 2012: 70-76). Banerjee believes that firms whic h pursue the stakeholder theory model use it to enhance their image while simultaneo usly marginalizing stakeholders that are discontent with its practices leading to what he calls “stakeholder colonialism” (Banerjee, 2007: 72). Due to the large influence corporations have on citizens (at home or abroad), Matten & Crane (2005) identified a paradigm shift of citizenship rights from states to corporations. Since an increasing amount of sectors in society have become privatized, corporations have developed a growing responsibility to guarantee certain social and economic rights of citizens (170). Fleming & Jones call this the “New Corporate Citizenship” theory, which is one of the “tools” of CSR. However, they demonstrate the danger of a profit-maximizing firm taking over responsibilities to guarantee citizenship rights, as it can be used as another tool of public relations. Rather than fighting unemployment, which is what the companies sometimes proclaim, they exploit the limited rights of citizens in other countries than their own (Fleming & Jones, 2012: 58-59). As mentioned above, Orock takes the stance that CSR practices are even harmful for human rights advancements, as they “have firmly established themselves as the new overarching story of how the chief agents of capitalism carry themselves in these times” (Orock, 2013: 35). Therefore, CSR is said to be used as fuel for capitalism (Ibid.: 30-35). In the past years the term green-washing emerged with its famous slogan “green is the new black”. Sustainability reports of MNCs are usually critic ized of being green-washed, which means that they mislead the consumer of the MNCs’ environmental consciousness opposed to what is really being practiced in reality (Aggarwal & Kadyan, 2014: 23). NGOs, such as Amnesty

21 International, are calling on governments to change the legislation regarding informa t io n disclosure, as it is important for communities to understand in which way business activities of MNCs affect them. Additionally, the information provided should be publically available as well as assessed by the government in order to prevent MNCs from green-washing their sustainability reports (AI & BHR Resource Centre, 2017: 14). Apart from all the criticism CSR faces, some scholars still believe that its discourse is constantly enhancing how we think about human rights in business practices and has had, as well as will have substantial effects on hard law practices in the future (Rosenblum). Neoliberalism calls for economic freedom, which expresses itself in a MNCs’ voluntary assumption of responsibility expressed through CSR strategies. A human right, as the name already says it, is a right. Rights can only be enforced through legislation that enforces it, creating duties and obligations. The purpose of human rights is to enable every person to lead a dignif ied life, untouchab le in self-determination and self-respect, or make their violatio n legally enforceable. How can then the voluntariness of responsibility that should be recognized by profit-maximizing actors protect such an inherent right? It cannot, because freedom/responsibility and rights/obligations cannot be categorically covered (Beck, 2015: 194).

3. BACKGROUND

3.1 The UN Guiding Principles The three-part framework “protect, respect and remedy” was drafted by the SRSG Prof John Ruggie, although originally designed to stay within the realms of soft law, it was aligned with other international guidelines intended to one day become customary international law or hard law (Ruggie, 2013: 45). Many countries have since implemented national action plans, as well as MNCs have adjusted their codes of conducts, however the government of Switzerla nd, although having drafted an action plan, has so far not addressed creating a legally binding framework. The SBI would insert these principles into the constitution.

3.2 Choosing Switzerland and the SBI Switzerland is one of the wealthie st countries in the world, with the largest part of its GDP generated from MNCs “importing raw materials and turning them into high-value goods, such as pharmaceuticals or luxury watches” (Hetze & Winistörfer, 2015: 154). Additionally, Switzerland has the highest presence of MNCs in the world and has been ranked the most competitive nation in 2013 (Hetze & Winistörfer, 2015: 154). Due to these extremes, it is

22 interesting to analyze how the Swiss debate is framed. The argumentation around the SBI lays a great foundation for this analysis, as it imposes more extreme measures than its precedents. Although the French Duty of Vigila nce was similar in its initial draft, important provisions— such as the burden of proof being on the side of MNCs—were taken out and the scope of how many MNCs it covers was drastically minimized (Bright, 2020: 8).

4. METHOD

4.1 Argumentation analysis Considering that this thesis seeks to identify how the arguments of the political debate of the Swiss parliament are shaped, as well as in what way they connect to the normative debate, the method consists of two steps. The first step is what Boréus (2017) calls “Reconstructing Debates” (71). There are two different approaches to reconstruct entire debates, namely the agent-orientated model, which structures the debate according to agents and the substance- orientated model, which structures the argumentation according to arguments of the same theme (Boréus, 2017: 70-72). Since the second part of this method seeks to relate the debate to the normative and legal academy, it is relevant to structure the parliamentary debate according to agents, as this facilitates to outline the core issues as well as discussing the arguments after every paragraph (ibid.: 65-72). Structuring the parliamentary debate with the agents-orientated model is done with the help of the “pro et contra dicere (to speak for and against)” (Boréus, 2017: 63). The first departing point is to find the issue expression, which in a parliamentary debate is usually “what is being argued for or against” (ibid.: 64). In the case of the parliamentary debate about the SBI for example the issue expression could either be “The National Council should reject the SBI” or the opposite “The National Council should accept the SBI”. In support of the issue expression follow first order arguments, which can either be pro- arguments (P1) or contra arguments (P2) of the issue expression. Second order arguments support first order arguments, so for example P1P2 would be the first pro argument for the second pro argument of the issue expression and so forth (ibid.: 64-66). The second part of the method will relate the scholarly debate to the parliamentary debate in order to get a holistic understanding of what concepts are taken in to consideration as well as left out.

23 4.2 Material Because the material I am analyzing is the parliamentary debate about the initiative text, it is important to briefly contextualize (1) how the federal popular initiative in Switzerland works, (2) where in the process the material is from and (3) what the initiative text legally demands. 4.2.1 The Federal Popular Initiative in Switzerland

The Federal Popular Initiative is one of the three tools of direct democracy in Switzerland, which enables citizens to express their demands about changing the constitution. Once the initiative is handed to the Federal Council, a statement of recommendation to the parliament and voters “for” or “against” the initiative is agreed upon or it can choose to draft a counterproposal. The parliament, consisting of the National Council and the Council of States, needs to be in agreement to either accept or reject the initiative or its counterproposal. If the initiative committee agrees with the counterproposal, it can withdraw its text, which leads to the direct imple me ntatio n of the counterproposal. If one of the councils disagree with it, a popular vote decides whether the text of the initiative is inserted into the Federal Constitutio n or not (ch.ch, n.d.).

4.2.2 The parliamentary debate of the SBI

The previous section is relevant to facilitate the understanding of which part of the parliamentary debate was selected for the analysis. The Federal Council wrote a recommendation to the parliament and voters to reject the SBI without the draft of a counterproposal. Since then, the legal commission of the National Council has drafted a counterproposal, which The Council of States rejected on 12th March 2019. Since the parliament always needs to be in agreement, the debate bounced back to the National Council (Konzernverantwortungsinitiative, 2020). It is therefore relevant to analyze arguments of the parliamentary debate of the National Council, taking samples of the SVP (Swiss Peoples Party – Right wing), the SP (Social Democrats – Middle Left), the FDP (Free Democratic Party – Middle Rights wing) and the GP (Green Party – Left wing). In these debates, representatives of different parties bring up arguments for and/ or against the initiative. The Council of States should have voted upon the acceptance or rejection of the counterproposal again in March 2020, which was delayed due to the Covid-19 crisis. If the Council of States agrees to the counterproposal, the text will immediately be implemented into the constitution, if it rejects the proposal, there will be a popular vote on the original initiative text.

24

4.2.3 Text of the Initiative

Article 101a(2)(a) of the constitution urges companies to align their business (at home as well as abroad) with “internationally recognized human rights and international environme nt a l standards” (Bueno, 2018: 2). These standards must also be respected by companies they have control over, meaning not only legally, but also economically, which includes “subsidiaries within a corporate group but also subcontractors or suppliers under certain circumstances” (ibid.). Compulsory due diligence requires these companies to adopt codes of conduct which are outlined in Article 101a(2)(b), and making them liable for violations unless they can prove that they took all necessary measures to prevent such damages, which grants access to effective remedies by the Swiss court (Article 101a(2)(c)). Finally, to ensure that other laws do not clash, this legislation will be implemented in the superior constitutional law (Article 101a(3)) (KOVI, 2015).

4.3 Delimitations Due to space and time restrictions, I did not include the provisions and differences of the recommended counterproposal. Additionally, an argumentation analysis on all politicians of the National Council as well as the Council of States would have extended the limits the thesis is bound to. It is also important to take into account that left, middle and right wing parties are taken into the context of Switzerland. The entire spectrum could vary in other countries, especially concerning the middle parties.

5. ANALYSIS AND DISCUSSION How are the political leaders of the most densely MNC operating country in the world debating about the implementation of a law for the regulation of MNCs on constitutional level? The first section of this chapter seeks to answer this question by conducting an argumentation analys is. The second section will then relate the arguments of the parliament to the academic debate in order to draw correlations as well as identify possible ideas and concepts that are missing therein.

5.1 Argumentation analysis Placing the debate in an agents-orientated model, will help structure the material in a pro et contra fashion, which will help the analysis on whether the arguments are convincing and how

25 they relate to one another. This provides a basis to then connect theoretical understandings with political arguments in the next section.

5.1.1 Christa Markwalder

Christa Markwalder belongs to the FDP-The Liberals Party—whic h is classified middle right wing in Switzer la nd.

Issue Expression: The original text of the SBI must be rejected

P1: Switzerland does not only accommodate MNCs, but also small and medium size d enterprises, which would be affected by the initiative and have a negative impact on Switzerla nd as an economic business location. P2: Corporations are already realizing their responsibilities regarding Human Rights and the environme nt in what is for them most plausib le and reasonable. P1P2: Most transnational corporations have signed the UN Global Compact and adjusted their CSR programs accordingly. P2P2: Additionally, they usually invest in foundations in the countries where they are present. P3: The initia tive is very radical in its nature P1P3: The SBI requires compulsory due diligence at constitutional level P2P3: Not only for the parent company, but all its legal and economic subsidiaries are liable for damages. P3P3: The burden of proof lies with the company, meaning that transnatio nal corporations are under constant suspicion of not complying with human rights as well as international environmental standards. P4: The misconduct of a few individual companies has been used as a means to public scandal, but we cannot draw general conclusions for the misconduct of single cases. P5: The initiative committee is not considering what has already happened in the field of Corporate Social Responsibility. P1P5: Companies are already conducting their own mission statements as well as expanding their compliance departments in order to follow national and international standards. P6: The initiative will not reach the aim that was intended by the initiative committee.

26 P1P6: The initiative committee is assuming that the Swiss legal system is better than any other by placing this law above the local law of other countries. P2P6: The initiative will risk that companies will pull out their business fr o m poor countries and therefore creating false incentives regarding foreign investments. P7: The initiative exceeds regulations that are in place for corporations in France, the UK or the USA. (Nationalrat, 2019: 2-3)

Discussion What already happened in the field of CSR (P2) does not properly support the conclusion that the initiative should be rejected. A supporting element is missing from the argument explaining how the regulation through CSR is sufficient concerning the demands of the initiative text. Foreign investments possibly being relocated as well as Swiss law risking to be reflected as “better than” legal systems from other countries is well-argued and supports the main argument that these considerations might not have been taken into consideration by the initiative committee (P6). Some of the arguments that Markwalder present are partly based on moral perceptions, rather relying on a formal, well-supported claim, such as “the initiative is very radical” (P3). This argument is supported by mere statements of the initiative text. If one were to exchange the word “radical” with “progressive”, the same supporting statements could be used, which makes its foundation weak. Moreover, that the initiative seeks to exceed previous regulatio ns (P7) is a fact, which could also be used as a counter-argument. The argument is missing support to explain why this extension is dangerous or how it would impact Switzerland negatively.

5.1.2 Cédric Wermuth

Cédric Wermuth belongs to the SP—Social Democratic Party—whic h is classified as a middle left wing party in Switzer la nd.

Issue Expression: The SBI shall be accepted.

P1: If you look at the headlines of the media from only the last month, it becomes evident that more regulation must take place

27 P1P1: Wermuth presents 12 headlines from international media stretching from 12 May to 13 June, where Swiss companies have been practicing misconduct in regards to Human Rights and the environment. P2: The group that is looking at the factual situation is the group that argues for the SBI’s acceptance. P1P2: It is not the profit-maximizing “bandits” who aim to squeeze out as much profit as possible, regardless of committing atrocious violations on the way. P2P2: It is not the people that think we are almost at the goal, all that is missing is a tiny bit of self-regulation. P3P2: It is the third group that is arguing upon the factual situation, identifying correctly that the goal is far from reached. C1: The majority of corporations are compliant with their activities abroad C1C1: Due to the size of multinational corporations, even if only 20% misbehave it is problematic and solutions need to be found for a sustainable globalization. P4: The principle of the neoliberal revolution has been turned on its head in the last thirty years. P1P4: Switzerland used to be a country where the idea of a liberal society, the idea of liberalism, of a liberal democracy was anchored in the principles of the responsibility of ethical action. It was always clear to the economic and political elites that they needed to lead with a good example and that they carried this responsibility more than anybody else, instead we blame the unemployed for not having a job and took away responsibility from all the actors that really have power in society. P5: Parents teach their children that you cannot always behave flawlessly, but if your actions hurt others, you need to take responsibility, this principle should be incorporated into our constitution. If you cause harm or damage, you need to compensate for it as well as take active steps to avoid such damage in the future. C2: Some say that the initia tive is too radical. C1C2: The initiative is the opposite of radical C2C2: It would have been radical to question the unequal economic relations between the north and the south. C3C2: It is not radical to promote the principle of Human Rights equally to everyone. (Nationalrat, 2019: 33-34)

28 Discussion Supporting the main argument by naming different headlines which reveal the non-compliance of MNCs abroad, Wermuth demonstrates the need for more regulation, providing a well-based pro argument for the conclusion that the SBI should be accepted (P1). With the statement that people voting against the SBI are not looking at facts, it seems the argument falls apart at its premise, especially through the more radical terms used in the supporting argument that they are profit-maximizing “bandits” (P2). By acknowledging that not all MNCs are violating human rights and environme nta l standards (C1), Wermuth supports this premise with a counter-argument referring to the size of MNCs, which have an immense impact on the globe. Therefore, by rejecting a counter- argument, she takes into account a possible contra-argument, which is a well-suited tool to form an argument. Wermuth uses the everyday example of parental upbringing as an argument for the conclusion. The question remains whether it is legitimate to compare the normative claim of parent-child relationships with state-MNC relationships. In my opinion the comparison is a false dichotomy, as there are many complex facets in the latter concerning corporate structures, global agency and the question of responsibility (P5). By refuting the premise that “the initiative is too radical” (C2) by providing support of the arguments through (C2C1) something that is more radical and (C2C3) the modesty of promoting human rights equally to everyone, Wermuth manages to ground her argumentat io n.

5.1.3 Regula Rytz

Regulat Rytz belongs to the GP—Green Party—whic h is classified as a left wing party in Switzerland.

Issue Expression: The SBI should be accepted immediately.

P1: The SBI is part of the progressive tradition in Switzerland being a pioneer in search of sustainable solutions from local to global problems, which has unfortunately been compromised in the last decades, due to the interest in profits. P1P1: Swiss banks have financed the apartheid regime in South Africa. P2P1: Swiss companies have made their money from illegally mined gold for years - gold that has the blood of the people who mined it and the stain of the destruction of nature.

29 P3P1: Swiss companies produce highly toxic pesticides for countries in which the population cannot defend themselves because environmentalists have to fear for their lives. P4P1: Switzerland is an international trading giant and with size comes responsibility. P1P4P1: A third of the world's crude oil is bought and sold in Geneva. P2P4P1: Two thirds of the international trade in base metals such as zinc, copper, aluminum etc. is carried out in Switzerland. P3P4P1: Around 70 percent of the world's gold is refined in Switzerland. P4P4P1: Two thirds of the grain traded worldwide P5P4P1: Over half of the worldwide traded coffee goes through Switzerland P6P4P1: Half of the worlds traded sugar, cotton and so on and so on pass through Switzerland. P5P1: P4: In the past, Switzerland has been providing refuge to dictators and criminals as well as their assets, which already needed to be corrected once before and it will happen again to the Swiss commodities trading center as well if we do not regulate the corporations committing these violations.

P2: The values of a modern democracy have been compromised with all the violatio ns committed by Swiss MNCs abroad and with the SBI, by finally taking responsibility, they can be restored again. P5: Responsibility needs to be assumed there where the impact is the greatest and that is not in the green washed sustainability reports of the MNCs, it is where the violatio n is taking place. (Nationalrat, 2019: 35-36).

Discussion: Rytz is especially concerned with how Switzerland has damaged its reputation in the past and how powerful Swiss MNCs are within the global economy. She mentions the SBI is important to restore Swiss democracy and reputation and implies that voluntary measurements are only used for publicity. The way that the arguments are structured shows that Rytz wants to change the structural difficulties that are underlying capitalism, which she supports with five pro-arguments of violatio ns committed, in order to maximize profits, regardless of harms that were caused. The

30 focus on restoring democracy and criticizing policies will be interesting to examine in the next section.

5.1.4 Zanetti, Claudio

Zantti, Claudio belongs to the SVP—Swiss Peoples Party—whic h is classified as a right wing party in Switzer la nd.

Issue Expression: The SBI must clearly be rejected.

P1: We should be doing nothing else than talk about how to improve Switzerland as a business location, because that is what essentially is our raison d’être. P1P1: In the first article of our constitution, it says that the confederatio n “promotes common welfare”, which is not the aim of the SBI P2P1: The initiative is a sabotage of the economy P2: Globalizatio n is a positive development, which the initia tive will compromise. P1P2: poverty is globally at its lowest, access to health care and clean water has never been so advanced and hygiene is better than ever. P2P2: Swiss based companies have massively contributed to these positive developments in the world and it is something we can be proud of. P3: The task of the state is to ensure that basic conditions are improved and not to take economic-political decisions in other states. P1P3: With this initiative, other states will not have the chance to improve conditions for their citizens. P2P3: Other countries do not want foreign judges to make decisions for them. P3P3: This initiative will make the legis latio n vulnerable through high administrative demands. P4: Human Rights play no role at all in other countries, people will just try to file a lawsuit with demands that are too high. For them, it is all about the money. (Nationalrat, 2019: 33).

Discussion: Promoting welfare, protecting Switzerland as a business location and praising globalization is what can be taken from Zanetti’s argumentation. (P1) is a well-grounded concern, as Zanetti

31 discovers a possible clash with the first article of the constitution which must be analyzed further. Whether or not globalization is good or bad (P2) can however not be taken to support the issue expression that the SBI should be rejected, as it is not entirely relevant. In (P3), Zanetti mentions that the state must realize basic conditions and not take economic political decisions abroad. As the SBI is implemented on a national level to protect such basic conditions, as well as only Swiss Companies are liable as a consequence, this argument also lacks sufficient grounding to support the issue expression. Further, (P4) is an emotional claim that makes presumptions on how victims abroad will corrupt the law. As there is no supporting argument or case, this cannot be taken as support for the issue expression.

5.1.5 Conclusion

First off, due to the argumentation being a debate, the arguments are mostly missing supporting references. As a general observation, the representatives of the left-wing parties are usually arguing in the dimensions of ethics and human rights, while the right-wing party’s debate in the realms of the economic consequences and promoting welfare. Wermuth and Ritz both use empathy arguments by working with numbers and listing cases of violations of MNCs or the misconduct of Switzerland abroad. On the other side, Zanetti and Markwalder use arguments of sovereignty, and constitutional values to promote common welfare as supporting arguments to reject the initiative in order to maintain a free market economy. It becomes evident therefore, that the parties do not provide arguments that overlap entirely, but stay within their separate argumentation for ethics or for economics. These conclusions provide a relevant basis for the next chapter, which is analyzing and weighing these arguments, by comparing them to the scholarly debate in order to identify possible correlations, misconceptions or concepts that are left out completely.

5.2 Application of the theoretical framework to the parliamentary debate As mentioned above, this section seeks to analyze how the political debate in the parliament is framed, whether core concepts that scholars talk about are considered and which concepts are left out completely from the debate. In order to achieve this, four main themes have been established.

32 5.2.1 Switzerland as an economic business location

One of the concerns in the parliament is that with the strict restrictions of the SBI, MNCs will be encouraged to move their headquarters away from Switzerland to a country with less restrictions. For this reason, Markwalder and Zanetti argue that international cooperation is necessary to prevent damage for Switzerland as a business location (National Council, 2019: 2; 33). This notion can be related to the scholarly debate about the structural problems of neoliberalism. As mentioned in the theory chapter, not only does neoliberalism drive the competition of MNCs, but they are so influential that states compete as well (Rodrik, 2011: 200-202). According to precedent law, such as the French Duty of Vigilance that covers main points of the initiative, it could be observed that the newly implemented legislation did not generate a competitive disadvantage for French MNCs (Bright, 2020: 8). Ritz, a representative of the Green Party, recognizes that “the values of democracy have been compromised” (National Council, 2019: 35). This statement can be related to the “trilemma” of hyperglobalization, national sovereignty and democracy - that Roderik (2011) conceptualized. If we consider Ritz’ perception that democracy in Switzerland has been compromised, in order to restore it, either the nation state must be eliminated or hyperglobalization minimized. This can be done by implementing international standards— such as the UNGP—into nationa l legisla tio n, which the SBI intends to do (Rodrik, 2011: 201). Wermuth also recognizes that the “principle of the neoliberal revolution has been turned on its head in the last thirty years” and mentions that Switzerland’s actions used to be anchored in ethical actions (National Council, 2019: 34). Ulrich identifies this incapability of ethical action by the state in times of “hyperglobalization” as a consequence of states being caught under the constraint of the MNC’s capital exploitation, which in turn takes away the states power to factor in ethics properly (Ulrich, 2016: 361-370). These concerns can also be viewed from a global justice perspective. A primary agent of global justice is responsible to set up a legal framework to ensure that secondary agents abide by the rules. Shifting this responsibility to corporations and giving them the power to set their own framework increases the dependency of the state and risks the MNC itself to become an agent of global justice. Some scholars see this paradigm shift as dangerous, because if MNCs are agents of global justice, they have obligations towards global justice, which justifies that

33 they get access to the same tools, as states have, to fulfil these requirements (such as military power, government, etc.) (Hsieh, 2015: 226; Bishop, 2012: 130). To conclude, the concern of Switzerland as a business location being in danger through the acceptance of the SBI is a valid one, however there is a missing dimension, which connect this structural problem to the effects of neoliberalism. Further, the French Duty of Vigila nce that was implemented in 2017 has not shown any such competition problems.

5.2.2 Is Corporate Social Responsibility enough?

Both Markwalder and Ritz use CSR as an argument in their debate, however to support opposite conclusions. On the one hand, Markwalder implies that MNCs are realizing their responsibility towards human rights and the environment by aligning their CSR policies with international guidelines, such as the UN Global Compact (Nationalrat, 2019: 2). On the contrary, Rytz argues that “responsibility needs to be assumed there where the impact is the greatest and that is not in the green-washed sustainability reports of the MNCs” (Nationalrat, 2019: 35-36). Applying theory to practice, it becomes evident that there are academics who argue for both sides. As previously mentioned, the stakeholder theory endorses CSR as a sufficient tool for corporations to act ethically, as long as they engage and cooperate with the stakeholders affected by their practices. Criticism is exercised in the possibility of fair interactions between the MNC and its stakeholders. It would therefore first be important to conduct a critical stakeholder analysis in order to measure the bargaining powers of the stakeholders. Cooperation could even lead to MNCs exploiting these power imbalances in order to achieve their goal, which is what Banerjee calls “stakeholder colonialism” (Fleming & Jones, 2012: 70-76; Banerjee, 2007: 72). Orock goes further to explicitly mention the UN Global Compact as a danger, because companies that adhere to it have reason to promote their CSR reports by proving partnership with the UN, while no measurable progress has been done (Orock, 2013 : 30-35). In order to prevent MNCs from green-washing their sustainability reports, Amnesty International offers a solution, namely to implement mandatory information disclosure and due dilige nce into nationa l legis la tio n—whic h in this case the SBI would do. Governments need to assess the information which is public in order to prevent MNCs from misleading their stakeholders (AI & BHR Resource Centre, 2017: 14).

34 Missing from the debate is whether the freedom/ voluntariness of corporations and yet their assumed responsibilities through their CSR discourse can meet the demands of human rights. Rights only exist when there is a legislation that guarantees them, which stems from obligatio ns. Therefore, according to Beck (2015), the voluntariness of CSR implies that corporations have responsibilities and not obligations, which in turn means that rights – here Human Rights – cannot be adequately protected by it (194). Whether corporations have obligations towards Human Rights is discussed in the debate about global justice. Zanetti mentions that it is the state’s duty to ensure that basic conditions must be ensured (Nationalrat, 2019: 33). Taking into account that this means basic human rights must be protected triggers the conversation about whether basic human rights can hold up with neolibera lism. Moyn (2015) believes that human rights are too minima l in their nature to balance out its “frère ennemi” neoliberalism (151-169). Obligations that MNCs carry can be drawn from Rawls’ theory of justice, specifically in the Duty of Assistance. Especially when conducting business in burdened societies, a MNC does not only carry negative duties to do no harm, but also the positive duty to actively take steps to strengthen institutions (Hsieh, 2004: 646). Further on the subject, Young (2004) identifies how through the lens of capitalism, economics and politics has transcended borders, but the obligations have remained within (371). To conclude, CSR is realized as a problem in the parliamentary discourse of the Swiss National Council, as it has been shown by relating it to the theory. Theoretical understand ings of MNCs not only carrying responsibilities, but also needing to realize obligations within the realms of global justice are missing in the political debate. Urges towards the state to take back this obligation by legally transcending borders in order to ensure the protection of Human Rights adequately have been made in both theory and practice.

5.2.3 International vs. State Law

Wermuth refers to international media headlines to demonstrate that Soft Law is not sufficient (National Council, 2019: 33), whereas Markwalder declares the initiative to be too radical because (1) it requires compulsory due diligence, (2) for the parent company as well as its economic controlled subsidiaries and (3) due to the burden of proof being on the side of the company, MNCs will always be under constant “suspicion of not complying with Human Rights as well as international environmental standards” (National Council, 2019: 2)

35 According to Chesterman (2007), states from the Global North are much more drawn to international soft law, which implies a sort of euro-centrism (328). The public negative med ia attention, which Wermuth refers to (Nationalrat, 2019: 33) has had a positive outcome for MNCs to set up private codes of conduct (Miller, 2015: 433). Miller (2015) distances herself from global regulation and suggests that more work needs to be pushed in the debate around transparency, as this will change consumer demands which will in turn improve working conditions in the supply chain. For this reason, she suggests a “Transparency Act” (435-463). Although many philosophers suggest that international law, especially the UN treaties and the UDHR has corporations in its scope, in some treaties it has been consciously removed in the General Comment (Ruggie, 2013: 40-41). This is mainly due to the reason that many national legislations exclude corporations from being held accountable, which would create a contradiction between national and international law (Ruggie, 2013: 42). For this reason, it is common to target the state in which the wrong-doing has occurred, however this is a hard task when institutions are weak, which is why Chesterman (2007) suggests regulation at the level of “Home Jurisdiction” (323), de Schutter (2006) adds that this may only be done by getting permissio n from the host state (8). Zanetti argues that “huma n rights do not play a role in other countries” (Nationalrat, 2019: 33), which I interpreted as him meaning burdened societies with weak institutions in place (see Rawls, 1999: 90), unable to enforce Human Rights protection. In such cases, Hsieh (2004) believes that not just laws of extraterritoriality would be a solution, but also that MNCs have a duty to assist in such societies by actively taking steps to promote their institutions (646). Finally, although all the provisions that Wermuth calls “radical” (Nationalrat, 2019: 34) are in the French Duty of Vigilance, the concerns are not well grounded, as precedent has shown that even in France restrictions are still too slim to properly hold MNCs accountable. Politicians of the National Council have included their legal concerns about implementing the SBI into hard law on a national level in the debate. What is missing, however, is the debate about precedent law, the duty to help burdened societies as a state (Rawls, 1990), as well as the duty of assistance as outlined by Hsieh (2004) regarding MNCs.

5.2.4 State Sovereignty and Extraterritoriality

One hot debated subject of the SBI is that it reaches not only MNCs that are based in Switzerland, but also corporations they have economic control over, meaning also third parties in the supply chain that do not have to be legally affiliated with the MNC. Markwalder is

36 rightfully concerned with this notion by expressing that the SBI “is assuming that the Swiss legal system is better than any other by placing this law above the local law of other countries” (National Council, 2019: 2). Zanetti also thinks that the SBI would infringe on state sovereignty and that “the task of the state is to ensure that basic conditions are improved and not to take economic-politic a l decisions in other states” (National Council, 2019: 33). Rytz implies that an extraterritorial jurisdiction is needed to assume responsibilities where the impact occurs (National Council, 2019: 35). Indeed, many lawyers are concerned with the same subject, as there are some obstacles, such as (1) the danger of law shopping (Bright, 2020: 1), (2) the difficulty to collect proof on other territories because official activities must only stay within borders (de Schutter, 2006: 8) and (3) the forum non conveniens, which allows courts to allocate the case to a better suited court (Chesterman, 2007: 315). There are some solutions to these problems, such which should be to seek consent from the state in which another state wants to intervene (de Schutter, 2006: 8). Additionally, the Council of Europe has advised against using the legal doctrine of forum non conveniens when it comes to MNCs that have committed Human Rights violations abroad (AI & BHR Resource Centre, 2017: 11). Further, it is possible to learn from the French Duty of Vigilance and the US Alien Tort Claims Act that such extraterritorial laws have been adopted and enforced before. The French Duty of Vigilance is the most comparable legislation, as it also targets not only MNCs, but also companies that they have economic control over. Young (2004) calls for a need to adjust the situation that politics and the economy has long transcended borders, but accountability has stayed within (371). Activists of the global justice movement, as well as Roderik (2011) do not see limiting sovereignty as something necessarily bad, because aligning national legislation with international guidelines could be a first step towards global governance, and to still preserve democracy and globalization at the same time (386). To conclude, the concerns of Markwalder, Zanetti and Rytz are well supported and als o an extensively debated subject amongst philosophers and lawyers. The structural difficulties of neoliberalism with its trilemma that it brings along, however are left out of the debate. Precedent laws, their difficulties as well as successes could also be addressed by the politicians in order to constantly enhance what the UNGP intended to achieve.

37 6. CONCLUSION

The impunity of MNCs has been addressed in various ways. Philosophers and economists have debated about the subject within the realms of neoliberalism and global justice, while legal scholars have focused on theoretical law implementations on a domestic or internatio nal level. This paper analyzed how politic ia ns argue about these issues in parliament by conducting an argumentation analysis on the parliamentary debate of the Responsible Swiss Business Initiative – A constitutional law, which consists of strict Due Diligence regulations, liability for Human Rights and environmental violations caused abroad, as well as a remedy provision enabling victims to access Swiss courts.

6.1 Findings By relating the argumentation of the parliamentary debate to the academic debate, correlatio ns as well as divergences came to light, which help answer the research questions how Swiss politicians are presenting arguments in favor or against the SBI, as well as how these arguments relate to the academic debate. First, it could be observed that politicians belonging to the same party tended to argue in the same dimensions. While left-wing parties mostly argue for responsibility, global justice, agency and ethics recommending acceptance of the SBI, it can be observed that right-wing parties take a more utilitarian course of maximizing utility and being concerned about competition disadvantages. Therefore, to be able to weigh arguments, politicians should consider to formulate more counter-arguments which they can then reject to make the debate less one-sided. Second, Swiss politicians realized the trilemma of “hyperglobalization”, national sovereignty and democracy in its simplest fashion. This “trilemma” of Rodrik (2011) contributed to the understanding that Ritz wants to restore democracy, which means that the political agenda should include debate about how to transfer some power to supra-nationa l organizations in order to restore globalization. Another option is to limit it by giving mor e power to the nation state, which means implementing national laws that turn around free market economy. Aligning national guidelines with soft law, such as the UNGP could present a first step towards global governance and global citizenship as the GJM strives for. Third, structural problems underlying neoliberalism have been emphasized on by Rytz. Egger sees a threat to the business location Switzerland, which is one of the structural problems of neoliberalism—that capitalism leads to states being under the constraint of MNCs (Ulr ic h, 2016: 361-370). Therefore, what could be taken up in the debate is how dependent Switzerland

38 is and whether this dependency could be resolved by the implementation of the initiative or slight alterations in that direction. Fourth, the successes and deficiencies of the closest precedent law, the French Duty of Vigila nce, were not mentioned at all in the debate. This could enhance the understanding of how it affected France, especially because so far no competition disadvantages have been detected. Fifth, CSR is expressed to be sufficient by some politicians, but criticized for lacking enforceability and for being used as a tool to boost the reputation of MNCs. While this has been shown to align with the academic debate, what has not been discussed is the relations hip of CSR policies, which work with the concepts freedom and responsibility and human rights . It has been shown that freedom and responsibility cannot cover the duties and obligations that rights carry. Taking up this point in parliament would be important, as CSR and the protection of human rights has been discussed. Sixth, the debate does neither include solutions in relation to the problems about extraterritoriality, namely that consent could be sought from the host state in order to respect state sovereignty, nor has there been any talk about regulation through codes of conduct as a solution for more transparency to adjust consumer demands. Finally, as the income of Switzerland is extremely dependent on GDP activities abroad, it is good to see that politicians are talking about the nations responsibility towards global justice. However, more contributions could be made towards realizing the responsibilities that MNCs carry and how Switzerland can contribute to them realizing these responsibilities. It can therefore be said that although most normative understandings can be correlated to the arguments of politicians, these seven findings suggest that the debate can be extended.

6.2 Further Research As this thesis focused on the practical debate, there are further factors that can be explored with the same material in terms of analyzing the discourse to uncover precisely what the underlying reasons for the arguments in the parliament are. This can be done by applying a discourse analysis to examine linguistics and rhetoric, as well as whether persuasion techniques were used. Additionally, a comparative case study could be conducted to examine whether these findings are unique to Switzerland, or whether they also exist in countries that are similar or completely different. Research in the field of the sociology of law could also reveal what outcomes the imple me ntatio n or rejection of the SBI has on society or how it compares with what was argued in the politica l debate.

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