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Supply Chain Law vs. Lobbies: The Tactics of the Industry

Supply chain law vs. lobbies

An Supply Chain Actthat punishes human rights violations and environmental destruction by companies? Is no longer in sight. Compensation before European courts? Wishful thinking remains as long as business associations work under the guise of cooperation to defuse the planned rules.

Cancer, cough, infertility. The inhabitants of the Chilean Arica suffer from this. Since the Swedish metal company Boliden shipped 20.000 tons of its toxic waste there and paid a local company for the final handling. The company went bankrupt. The arsenic from the waste remained. The people of Arica complained. And flash off before the Swedish court. Twice - despite criticism from the UN Human Rights Council.

An individual case? Unfortunately, no. Alejandro García and Esteban Christopher Patz from the European Coalition for Corporate Justice (ECCJ) have just investigated 22 cases of civil proceedings against EU companies for human rights and environmental violations abroad in their analysis “Goliath complain”. Only two of the 22 plaintiffs were formally judged - Arica's residents were not among them. Not a single plaintiff was granted compensation.

Why it is like that? "The cases are often tried under the law of the country in which the damage occurred and not under the law of the headquarters of the parent or lead company," says Garcia. Incidentally, a collective of people is usually harmed - regardless of whether it is the collapse of a factory or the pollution of a river. “However, national legal systems do not always allow a large number of plaintiffs to jointly assert claims for damages.” And finally, there are the deadlines. "Sometimes you only need one year for the assertion of claims from tortious acts." It is obvious that companies are not interested in an early approval of a supply chain law at EU level.

Supply Chain Act vs. Lobbies: Cooperation as a tactic

"Particularly perfidious are those trade associations which, under the guise of cooperation, ensure that the planned regulations are eased," says Rachel Tansey, who described the lobbyists' tactics in matters of supply chain law in the ECCJ analysis "Fine Out". In fact, there are not so few trade associations that act progressively and support a statutory duty of care. These include AIM, for example, which in 2019 spent up to 400.000 euros on lobbying in the EU.

AIM, of which Coca-Cola, Danone, Mars, Mondelez, Nestlé, Nike and Unilever are members, advocates political instruments that encourage companies to respect human rights. One would also like to see the responsibility to respect human rights “outside the scope of legal liability”. If included, AIM advocates limiting them to “serious human rights violations”. Tansey says, “AIM's preferred version of the law would not hold its members accountable for human rights abuses. If liability cannot be averted, however, the next best option would not extend to the company's entire value chain. ”Or to use the words of the not undisputed cocoa association:“ Companies must be enabled to disclose risks in their supply chains without having to worry about an increased liability risk. "

Lobbies: Voluntary initiatives as a cover

Then there are business lobby groups like CSR Europe. Their purpose, however, is to use voluntary corporate social responsibility initiatives as a cover. Many of its members are no stranger to human rights and environmental scandals when you think of VW - keyword exhaust scandal, says Tansey. In fact, as early as December 2020, the lobby group declared the need “to include work that has already been done by companies.” In addition, the importance of “developing standards' from below” is emphasized and the impression is “that the Commission needs trust in industry. there is no guided standardization ”. The association also clearly states what CSR Europe actually has in mind when it comes to the supply chain: “Supporting incentives” for companies and new European industry dialogues and alliances. Finally, it is believed that success will "depend to a large extent on the cooperation of the European private sector."

Equal conditions for everyone?

The national lobby associations of the countries in which there is already a supply chain law are meanwhile not inactive. First and foremost, these are the French. There you have to deal with the question of whether the upcoming EU law should align with the national law or vice versa. For the French lobbying association AFEP, it is clear: alignment, yes, but associated with it, please dilute its own law. “That's right,” says Tansey: “In Brussels, the lobby of large French companies is working to undermine the ambitious European legislative proposal and is pushing for weaker provisions than in France.” But that's not all Due diligence should not include climate change. The fact that the company Total is on the AFEP board no longer seems to be a coincidence. By the way, AFEP's lobbying work costs a lot: according to its own information, it costs 1,25 million euros a year.

Distractions of the lobbies

The Dutch business association VNO-NCW and the German business associations finally prove how misleading can work. The former communicates at home that it only supports a supply chain law at EU level, but not nationally. In Brussels, however, the project is described as "impractical" and "draconian."
Meanwhile, the German counterparts managed to weaken the national supply chain law. They are now trying to do the same in Brussels. In view of all these tactics, there remains only one hope, which Tansey cautiously formulates: "That the political leaders do not fall into the trap of locating an acceptable middle ground between brakes and apparently 'constructive' companies."

INFO: Current tactics of the business lobby

The demand for 'pragmatic' and 'practicable' regulations
The focus is on “positive incentives” for companies to do the right thing and aiming to avoid any liability, that is, serious consequences for companies involved in human rights abuses. The whole thing is packaged in sounding words such as: concerns about an “increased risk of litigation”, “frivolous accusations” and “legal uncertainty”. Behind this is the desire to limit the duty of care to direct suppliers to the company, i.e. the first stage in the global value chain. Most of the damage did not fall in there. Legal claims of the weakest would expire.

The push for voluntary CSR measures
Often these are already there - implemented by the industry, completely ineffective and make the legislative initiative necessary in the first place.

Leveling the playing field
Under the motto “level playing field”, the French business lobbyists - France already has a supply chain law - are currently pushing for an approximation of EU law below its own level.

In Germany and the Netherlands, business associations are opposing their own ambitious legislative proposals and are advocating an EU solution. At the EU level, they then try to weaken and undermine this uniform draft.

Photo / Video: Shutterstock.

Written by Alexandra Binder

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