SWITZERLAND Law and Practice Contributed by: Liburn Mehmetaj, Roxane Allot and Andreas Hösli, Walder Wyss Ltd
• establish a supply chain traceability system for conflict materials; • establish a reporting mechanism allowing all interested parties to raise reasonable concerns about the existence of a potential or actual adverse impact related to conflict materials; • conduct risk management (identify and assess risks; eliminate, prevent or minimise • on an annual basis, obtain assurance by an audit firm concerning their compliance with due diligence in relation to conflict materials; and actual adverse impacts); • document their findings; • publish a report on the fulfilment of their due diligence obligation within six months of the closure of the business year. Child Labour Due diligence requirements concerning child labour are triggered by a reasonable suspicion of child labour (typically, in the company’s sup - ply chain). There are two exemptions. SMEs (defined as companies that, together with the Swiss and foreign companies they control, do not exceed two of the three following size thresholds in two consecutive business years: (i) balance sheet total of CHF20 million; turnover of CHF40 million; (iii) 250 full-time employees on annual average) are exempt. A second exemp - tion exists in the case of low risks of child labour. A low risk may be assumed if a company does not produce or purchase products (or does not procure or provide services) in countries listed as “enhanced risk” or “heightened risk” in the Chil- dren’s Rights in the Workplace Index issued by UNICEF. Importantly, there is a counter-exemp - tion: the obvious use of child labour. An obvious risk of child labour means actual knowledge of the use of unlawful child labour, which must be obtained from reliable, objective and independ -
ent sources (eg, from legally binding court deci - sions, ILO reports or reports from other compa - nies subject to due diligence obligations in which the use of child labour for certain products or services has been explicitly noted). In-scope companies must: • establish a supply chain policy on child labour; • establish a supply chain traceability system in relation to child labour; • establish a reporting mechanism allowing all interested parties to raise reasonable con - cerns about the existence of a potential or actual adverse impact related to child labour; • conduct risk management (identify and assess risks; eliminate, prevent or minimise actual adverse impacts); • document their findings; and • publish a report on the fulfilment of their due diligence obligation within six months of the closure of the business year. Enforcement Enforcement of the due diligence requirements occurs primarily through transparency (report - ing obligations, as outlined above) and criminal sanctions. As mentioned above, companies in scope of the due diligence requirements are under an obligation to publish an annual report setting out how the company has fulfilled its due diligence obligations. In practice, this report is often published on the company’s website, though it may also form part of the (broader) annual non-financial report. Under Article 325ter of the Swiss Criminal Code, any responsible person who wilfully fails to publish the required report, or provides false information, may face a criminal fine of up to CHF100,000 (and up to CHF50,000 in case of negligence). Notably, this criminal offence does not represent a company fine, but a personal criminal sanction on the
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