«For due diligence to be effective, fair prices are needed»

On April 1, 2026, the Federal Council submitted the preliminary draft of the Federal Act on Sustainable Corporate Governance (NUFG) for public comment. Fairtrade Max Havelaar Switzerland supports the proposal in principle but points out significant gaps—and presents specific proposals for amendments. The consultation period ends on July 9, 2026.

A step in the right direction—but not far enough

The VE-NUFG is modeled after the EU Due Diligence Directive (CSDDD) and is intended to improve the protection of people and the environment along global supply chains, create legal certainty, and ensure a level playing field. From Fairtrade Max Havelaar’s perspective, it is positive that the draft provides for comprehensive due diligence obligations and supplements the previous piecemeal regulations on child labor and conflict minerals. At the same time, the organization identifies significant weaknesses.

Melanie Dürr, Head of International Cooperation and a member of the Executive Board at Fairtrade Max Havelaar, sums it up: «Binding human rights and environmental due diligence obligations are an important step toward strengthening the protection of people and the environment along global supply chains. It is crucial that new rules do not become a mere compliance exercise in which costs and responsibility are simply passed on to producers and cooperatives. Anyone who wants to effectively combat risks such as poverty, child labor, or environmental destruction must also address their structural causes. These include fair prices, long-term trade relationships, living wages, and shared responsibility throughout the entire supply chain. Only in this way can the new law truly have an impact.»

Address Structural Causes Rather Than Manage Compliance

Fairtrade Max Havelaar emphasizes that the NUFG can only be effective if it addresses the structural causes of human rights and environmental risks: poverty, unfair purchasing practices, a lack of living incomes and wages, and insufficient investment in prevention and remediation. Years of experience with global supply chains and collaboration with cooperatives show that sustainability regulations can only be effectively implemented if companies maintain long-term trade relationships, reimburse costs through fair prices, and—rather than withdrawing from high-risk areas—invest in prevention and remediation.

According to Fairtrade, the right to a living income and a living wage should be explicitly enshrined in the regulation as issues relevant to human rights. Companies would also be required to identify and continuously address any gaps in this regard within their supply chains. The companies’ own purchasing practices—such as price pressure, short-notice orders, payment terms, and contract conditions—should also be taken into account when assessing adverse impacts.

Fair Burden Sharing and Protection Against the Imposition of Obligations

A key concern of Fairtrade is the distribution of burdens. While the VE-NUFG includes measures to support SMEs in the supply chain, the organization believes these remain too vague and are significantly weaker than the EU requirements. The Fairtrade producer network CLAC estimates the start-up costs for building the necessary capacity at at least $20,000 per cooperative in the first year—costs that are often borne solely by the most vulnerable actors today.

Fairtrade therefore calls for binding provisions against the mandatory passing on of costs, as well as clear minimum requirements for the necessary support throughout the supply chain. Companies should not be allowed to delegate their due diligence obligations to suppliers through unilateral contract clauses or blanket audit requirements. In line with Article 18 of the CSDDD, model contract clauses should also be incorporated into the NUFG to ensure a fair division of responsibilities and appropriate cost-sharing.

Improvement Before Withdrawal from High-Risk Areas

Fairtrade Max Havelaar warns of an unintended consequence of mandatory due diligence requirements: Companies might be tempted to withdraw from high-risk areas across the board—with negative consequences for small-scale farmers and workers on the ground. The principle of «improvement before withdrawal» should therefore be explicitly enshrined in the regulation. Terminating a business relationship should only be a last resort if serious prevention, mitigation, and remediation measures have been exhausted or are clearly futile.

Fairtrade warns against counterproductive «zero-tolerance» clauses, particularly when it comes to child labor: Such a zero-tolerance policy could inadvertently drive child labor, as severing business relationships pushes the affected families into even greater hardship.

Climate, Oversight, and Liability

Fairtrade welcomes the fact that the preliminary draft regulates human rights and environmental due diligence obligations together. From Fairtrade’s perspective, however, a stronger and enforceable climate obligation would have been important. Producers in the Global South are among those most affected by the climate crisis, even though they have contributed the least to it. Companies should be required to align their business models and procurement practices with climate goals and to invest in climate adaptation and environmental protection throughout their supply chains.

On the issue of oversight and liability, Fairtrade clearly advocates for an explicit liability standard in the NUFG—it argues that the current approach of referring to the existing Swiss Code of Obligations does not provide sufficient legal certainty for either companies or affected parties. At the same time, the supervisory authority must pay particular attention to power imbalances in the supply chain and examine whether companies are shifting risks onto weaker actors through market withdrawal, contract clauses, or data requirements.

Source: www.maxhavelaar.ch

This article originally appeared on m-q.ch - https://www.m-q.ch/de/damit-sorgfaltspflichten-wirken-braucht-es-faire-preise/