Implementing Child Labour Due Diligence: Two Options for Companies in Switzerland
The new Swiss regulation gives companies two options to implement the child labour due diligence requirements. Which one is better for your company?
Implementation of due diligence starts in 2023
The RBI Counter-Proposal that entered into force in January 2022 introduces new obligations for Swiss companies in three areas:
1. A reporting obligation for non-financial matters,
2. a due diligence and reporting obligation with regards to conflict minerals and metals,
3. a due diligence and reporting obligation with regards to child labour.
As due diligence obligations will need to be applied for the first time in 2023, many companies are now getting ready to set up their due diligence systems. First reports in the three areas will be published in early 2024.
Two options to implement child labour due diligence
Before setting up their child labour due diligence system, companies in the scope of the regulation need to decide which of the two options to implement the new requirements they will apply:
◦ They can either follow the steps outlined in the Swiss ordinance on Due Diligence and Transparency in relation to Minerals and Metals from Conflict-Affected Areas and Child Labour (DDTrO).
◦ Or, they can make use of the exception in the law (CO Art. 964j Para.4) and apply the international standards listed in Annex 2-B of the ordinance[1] “in their entirety”. This would exempt them from the child labour due diligence specifics defined in the Swiss ordinance.
Considering effort and impact
Relevant questions for companies to evaluate the two options and make an informed decision include, for example:
◦ What are the main differences between the two options?
◦ What option requires more effort and resources of the company to set up and implement due diligence?
◦ What is the company’s ambition level for responsible business conduct?
◦ What option has a bigger positive impact from a human rights perspective?
The ambition level will be determined, among other things, by the drivers for human rights due diligence that are exerting pressure on each company to a varying degree.
International legal developments and customer expectations
Swiss companies are not only covered by Swiss legal obligations but are increasingly facing rising expectations of international (business) customers to conduct human rights due diligence. In particular, with the adoption of the German supply chain due diligence act that enters into force in 2023, German companies will increasingly require their Swiss suppliers to demonstrate how they address human rights risks in their own operations and value chain. Meanwhile, in the EU, a new Directive on Corporate Sustainability Due Diligence is in the making.
When deciding which option to favour for your child labour due diligence, Swiss companies are thus well advised to consider in how far these and other international developments will influence your business, and include the following questions in decision-making:
◦ Is my company directly or indirectly covered by the German supply chain due diligence act?
◦ What option is better suited to comply with the Swiss and German due diligence laws at the same time?
◦ What option prepares my company better for upcoming legal developments (e.g. EU Directive) related to mandatory human rights due diligence?
For our answers to the above and more questions, read focusright's Q&A for companies.
[1] Annex 2 - Part B. Regulations on child labour
“In order to be exempt from the due diligence and reporting obligations under Article 9, an undertaking must comply with the following regulations:
1. ILO Conventions Nos 138 and 182 and the ILO-IOE Child Labour Guidance Tool for Business of 15 December 2015, and
2. the OECD Due Diligence Guidance for Responsible Business of 30 May 2018 or the UN Guiding Principles on Business and Human Rights.”