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Saturday, June 22, 2024

Is corporate responsibility towards society and the environment a winning constraint? Switzerland's smart mix approach.

For several years now, in response to the growing interdependence of the world's economies, the international community has been developing principles and guidelines aimed at defining the role and responsibility of companies in relation to the environment and society as a whole.

In response to the creation of the UN Global Compact and the adoption of the UN Guiding Principles on Business and Human Rights ("Ruggie Principles"), international, regional and national initiatives have multiplied. Principles ("Ruggie Principles"), there has been a proliferation of initiatives at international, regional and national level.

More recently, several of the UN's 17 Sustainable Development Goals (SDGs) emphasize the importance of business in the process of achieving them.

What is Corporate Social Responsibility (CSR)?
The notion of CSR has been used since the 60s to indicate the effects of companies on society and the environment. It has been associated with many concepts such as corporate philanthropy, business ethics, etc. and then evolved from the "nice-to-do" concept to "doingwell-by-doing-good."
Thus, corporate social and environmental responsibilities represent an evolution in the notion of the company's role in society, which sometimes goes beyond mere compliance with standards. A notion of sustainability that adds value to the organization itself, to society as a whole and to the Swiss environment, which relies on the subsidiary intervention of the state.
Internationally, the Confederation ensures that CSR initiatives are widely implemented to avoid distortions of competition.

The business case for CSR
A genuine CSR strategy enables companies to combine long-term strategic objectives with philanthropic ones, while enabling them to differentiate themselves from their competitors, conquer new markets and become more attractive in the eyes of their investors.
The example of Cadmos Swiss Engagement Fund, promoted by de Pury Pictet Turrettini & Cie S.A. (PPT), is interesting in this respect. This fund is made up of companies selected according to the Buy & Care® investment strategy, which integrates the dimension of social responsibility into traditional financial analysis. In three years, this fund has generated
a cumulative performance of 27.6%, outperforming the SPI Total Return index by 14%, and thus demonstrating that profitability, sustainability and responsibility
can be reconciled.
CSR therefore becomes attractive for a company when its sustainable behaviors can bring about significant improvements, for example, in its economic performance, its operational efficiency, its environmental performance or its social performance.
operational efficiency, innovation, quality and competitiveness.
CSR commitments create value not only for the companies themselves, but also for their suppliers, who are increasingly aware of the importance of ethics and quality in their contracts, for consumers, who are attentive to the responsible sourcing of products, as well as for anyone else who is affected by the companies' activities, such as their employees or the governments of the countries where they are registered and/or operate.
operate, etc.
Numerous research studies show that companies that have adopted socially and environmentally responsible strategies thrive in the long term. Deceiving consumers, circumventing regulations and compromising competitors are behaviours which may directly increase shareholder value in the short term, but which may also have a negative impact on the bottom line.
may compromise the company's profitability in the long term.
The application of a CSR policy also provides a tool for companies to monitor and control compliance with standards and regulations,
to control risks, and to prevent and manage conflicts, for example by using alternative dispute resolution methods.
Last but not least, CSR expresses, quite simply, a company's determination to comply with fundamental principles recognized worldwide and based on,
respect for human dignity and the environment.

How does CSR play out within a company?
Depending on the business and the type of organization, a company's adherence to a CSR policy may take the form of corporate policies, internal information, guidelines, process descriptions, codes of behavior, management and sustainability systems, life cycle assessments, sustainability reporting and due diligence reviews, e.g. concerning human rights or the environment, and so on.

As far as possible, a company's principles and procedures should cover the full range of effects of its activity, including the supply chain, and take into account the needs of its stakeholders.
take into account the needs of its stakeholders. Indeed, transparency and a willingness to engage in dialogue are fundamental principles of CSR and contribute substantially to the success of its practical application.
to the success of its practical application.

The cost of implementing corporate social responsibility measures "can be an obstacle [especially] for SMEs". However, some companies do not hesitate to get involved. Geneva-based Loyco, for example, helps to reintegrate the unemployed into the workforce by creating "specific positions with missions and supervision" which are paid for by the unemployment fund.
paid for by unemployment benefits. At the same time, Loyco has opted for total transparency in its strategy, as well as for a participative shareholding structure: some twenty employees own the company, and each has one vote, regardless of the amount invested. The salary scale is transparent, so everyone is aware of it, and it guarantees equality. Finally, Loyco has set a maximum profitability target of 10%. One third of the profit is reinvested, one third is distributed to shareholders and the final third goes to employees.
An SME model that endures over time, as well as a desire to pursue certain values, were cited as the basis for this approach.

CSR and companies in Switzerland
Since CSR covers a wide range of areas - including environmental protection, working conditions, the fight against corruption and supplier relations - it is based not only on a body of standards to which companies are obliged to adhere, but also on principles to which they are free to choose.
freely decide to submit to.
In the first case, CSR derives from compliance with the binding rules of substantive law in force in Switzerland, or which are applicable to a Swiss company by virtue of its structure, sector and modus operandi. Failure to comply with these rules may expose the company and/or its managers to civil, criminal or administrative sanctions,
in Switzerland and/or abroad.
In the second case, compliance with CSR - through, for example, the implementation of codes of conduct, charters or the awarding of labels or certifications - is linked to the desire of the organization, whether SME or large company, to ensure its long-term survival, to build customer loyalty by providing more attractive products and services, and to anticipate their infringements or those of the authorities.
The former no longer seems sufficient to exclude the latter. Indeed, the Federal Council has suggested that legally binding measures and responsible behavior freely adopted by companies are not alternatives: they are complementary approaches that should enable synergies to be exploited. It is now clear that governments, including Switzerland, are increasingly demanding that companies comply with CSR principles at local level, for example, by including them in tender documents.

What are the new perspectives?
Following Directive 2014/95/EU on the publication of non-financial and diversity-related information by certain large companies and groups, the Federal Council is planning to put out to consultation a draft on sustainability reporting. The project will be based on EU regulations, and will therefore not disadvantage Switzerland as a business location. The plan was to start work once the EU member states' transposition plans were better known.
Member states had two years, i.e. until December 6, 2016, to transpose the Directive into their legislation, and have since adopted the necessary implementing provisions. In France, for example, Decree no. 2017-1265 of August 9, 2017 made it compulsory for certain large companies and groups of companies to publish non-financial information.
companies and certain groups of companies. In Italy, this has already been applied since January 10, 2017.

According to indications from the Federal Council, the Confederation should therefore set up a project "on sustainability reporting" during 2017. The Confederation is also in the process of adopting specific approaches to economic sectors that are of major importance to the Swiss economy. For example, as part of the revision of company law the Federal Council proposed in June 2014 to introduce legally binding transparency rules for Swiss companies active in the extraction of raw materials.

Also in the extractive sector, further progress has been made in implementing the recommendations of the "Report on Switzerland's strategy for implementing the UN Guiding Principles on Business and Human Rights".
Although the concept of CSR can sometimes be difficult to grasp, and the efforts made by the Confederation and the international community could still be improved, there is no doubt that the global context and economic paradigms are changing.

"Flexibility, sustainability and stakeholder inclusion" are currently identified as the main business model characteristics that can create not only profit, but also lasting, positive changes in society and the environment. Beyond legal constraints, the choice to adhere to them is up to companies.


The Study de Preux Attorneys advises individuals and companies on their commercial relations in Switzerland and abroad.
It assists its clients, who are mainly active in the service sector, when they set up business in Switzerland, in drafting and negotiating commercial contracts, and in settling disputes. She is supported by a network of experts selected to meet the most demanding requirements (www.depreuxavocats.ch).

Silvia Palomba is a passionate lawyer trained in Italy, the United States and France. Before joining de Preux Avocats in Geneva, Silvia practiced criminal law in Italy and worked in various capacities with NGOs and international organizations.
Together with other young professionals, Silvia founded Destination Justice, a non-profit organization working for a fairer world by creating lasting change.
At de Preux Avocats, Silvia is particularly active in criminal law, international criminal law
international criminal law, economic criminal law, public international law, international legal assistance and human rights. She is also responsible for developing the firm's new Corporate Social Responsibility (CSR) practice, offering legal services and advice to all companies wishing to engage in CSR. Her working languages are Italian, English and French.