Alexandra Binder
"Of course we are ruled by lobbyists."
Franziska Humbert, Oxfam
Whether it's exploitative child labor on cocoa plantations, burning textile factories or poisoned rivers: far too often, companies are not responsible for how their global businesses affect the environment and people. A supply chain law could change that. But the headwind from the economy is blowing strongly.
We need to talk. And that over the tiny bar of milk chocolate for around 89 cents, which you have just indulged in. In a globalized world, it is a highly complex product. Behind the little chocolate treat is a farmer who only gets 6 of the 89 cents. And the story of two million children in West Africa who work on cocoa plantations under exploitative conditions. They carry heavy sacks of cocoa, work with machetes and spray toxic pesticides without protective clothing.
Of course, this is not allowed. But the way from the cocoa bean to the supermarket shelf is virtually inscrutable. Until it ends up at Ferrero, Nestlé, Mars & Co, it goes through the hands of small farmers, collection points, subcontractors of large corporations and processors in Germany and Holland. In the end it says: The supply chain is no longer traceable. The supply chain for electrical appliances such as cell phones and laptops, clothing and other foodstuffs is similarly opaque. Behind this are platinum mining, the textile industry, the oil palm plantations. And they all attract attention with the exploitation of people, the unauthorized use of pesticides and land grabbing, which are not punished.
Is Made in A a guarantee?
That's a nice thought. After all, the local companies credibly assure us that their suppliers comply with human rights, environmental and climate protection standards. But there it is again: the supply chain problem. The companies Austrian companies buy from are usually buyers and importers. And they are just at the top of the supply chain.
However, the exploitation begins far behind. Do we as consumers have any influence at all? “Vanishingly small,” says the local MP Petra Bayr, who, together with Julia Herr, brought an application for a supply chain law into parliament in this country in March. "In some areas it is possible to buy fair products, such as the chocolate mentioned," she adds, "but there is no fair laptop on the market."
Another example? The use of pesticides. “In the EU, for example, the pesticide paraquat has been banned since 2007, but it is still used on global palm oil plantations. And palm oil is found in 50 percent of the food in our supermarkets. "
If someone breaks rights in a remote part of the world, neither supermarkets, producers nor other companies are currently legally responsible. And voluntary self-regulation only works in very few cases, as EU Justice Commissioner Didier Reynders also noted in February 2020. Only a third of EU companies are currently carefully reviewing their global human rights and environmental impact supply chains. And their efforts also end with the direct suppliers, as a study commissioned by Reynder showed.
Supply chain law is inevitable
In March 2021, the EU also dealt with the subject of the Supply Chain Act. The members of the European Parliament adopted their “legislative proposal on the accountability and due diligence of companies” with a large majority of 73 percent. From Austria's side, however, the ÖVP MPs (with the exception of Othmar Karas) withdrew. They voted against. In the next step, the Commission's proposal for an EU supply chain law, that didn't change anything.
The whole thing has been accelerated by the fact that some supply chain law initiatives had now formed in Europe. Their demand is to ask companies outside of Europe to pay for environmental damage and human rights violations. Above all in states where exploitation is neither prohibited nor executed. And so the draft for the EU directive should come in the summer and cause financial hardship for rule breakers: e.g. being excluded from funding for some time.
Lobbying against a supply chain law
But then the EU Commission postponed the draft largely unnoticed by the media until autumn. One question is of course obvious: Was the headwind from the economy too strong? Germanwatch expert for corporate responsibility Cornelia Heydenreich observes with concern "that in addition to EU justice commissioner Reynders, the EU commissioner for the internal market, Thierry Breton, has recently been responsible for the proposed law."
It is no secret that Breton, a French businessman, is on the side of the economy. Heydenreich is reminiscent of the German scenario: "The fact that the Federal Minister of Economics has also been responsible in Germany since summer 2020 has greatly complicated the process of finding consensus - and from our point of view also brought the lobbying demands of the business associations into the process more strongly." Nevertheless, she sees the developments in the EU not necessarily as a 'backtrack': "We know that legislative proposals at EU level are delayed from many other legislative processes." Heydenreich also says that the EU Commission wants to wait and see what the German draft law will look like: is still not said goodbye. "
Supply chain law in Germany on hold
In fact, the German supply chain bill was supposed to be passed on May 20, 2021, but was removed from the Bundestag's agenda at short notice. (Now adopted. Will come into effect January 1, 2023. Here is the Federal Law Gazette.) It had already been agreed. From 2023, certain supply chain rules should initially apply to corporations with more than 3.000 employees in Germany (that's 600). In a second step from 2024, they should also apply to companies with over 1.000 employees. This would affect almost 2.900 companies.
But the design has weaknesses. Franziska Humbert, Oxfam She knows the advisor for labor rights and corporate social responsibility: “Above all, the due diligence requirements only apply in stages.” In other words, the focus is once again on the direct suppliers. The entire supply chain should only be scrutinized on the basis of indications with substance. But now, for example, the direct suppliers to the supermarkets are in Germany, where strict occupational safety regulations apply anyway. “Therefore, the law threatens to miss its purpose on this point.” It also does not comply with the UN guiding principles that apply to the entire supply chain. "And it falls behind the already existing voluntary efforts of many companies," said Humbert. “In addition, there is no civil law claim to compensation. Workers who toil on bananas, pineapple or wine plantations for our food still have no real chance of suing for damages in German courts, for example for damage to health caused by the use of highly toxic pesticides. ”Positive? Be that compliance with the rules is checked by an authority. In individual cases, they could also impose fines or exclude companies from public tenders for up to three years.
And Austria?
In Austria, two campaigns promote compliance with human rights and environmental standards in global supply chains. Over ten NGOs, the AK and the ÖGB jointly call for the petition “Human rights need laws” in the course of their campaign. However, the turquoise-green government does not want to follow the German initiative, but is waiting to see what happens next from Brussels.
The ideal supply chain law
Heydenreich says that in the ideal scenario, companies are effectively encouraged to identify the greatest and most serious human rights risks in their entire value chain, and if possible to remedy them or to repair them. "It is primarily about prevention, so that the risks do not occur in the first place - and they are usually not to be found with direct suppliers, but deeper in the supply chain." Violations can also claim their rights. "And there must be easing of the burden of proof, ideally even a reversal of the burden of proof."
For the Austrian MP Bayr, it is important not to restrict an ideal law to corporate groups: "Even small European companies with few employees can cause major human rights violations in the global supply chain," she says. One example is import-export companies: “Often times, the staff is very small, but the human rights or ecological impact of the goods they import can still be very large.
For Heidenreich it is also clear: “The German draft can only provide a further impetus for the EU process and cannot set the framework for the EU regulation 1: 1. The EU regulation has to go beyond this at crucial points. "That, she says, would be quite feasible for Germany, and also for France, where the first overarching due diligence law in Europe has existed since 2017:" Together with the 27 EU member states, we can France and Germany would also become even more ambitious because then there would be a so-called level playing field within Europe. ”And what about the lobbyists? “Of course we are ruled by lobbyists. Sometimes more, sometimes less, ”says Oxfam consultant Franziska Humbert dryly.
Global supply chain ambitions
In the EU A supply chain law is currently being discussed at European level. In autumn 2021, the EU Commission wants to present corresponding plans for a European directive. Current recommendations of the European Parliament are much more ambitious than the German draft law: Among other things, a civil liability regulation and preventive risk analyzes are provided for the entire value chain. The EU has already issued binding guidelines for the trade in wood and minerals from conflict areas, which prescribe due diligence for companies.
The Netherlands passed a law against the handling of child labor in May 2019, which obliges companies to comply with due diligence obligations with regard to child labor and provides for complaints and sanctions.
France passed a law on due diligence for French companies in February 2017. The law requires companies to take due diligence and enables them to be prosecuted under civil law if they violate this law.
In Great Britain a law against modern forms of slavery requires reporting and measures against forced labor.
In Australia there has been a law against modern slavery since 2018.
The USA have been imposing binding requirements on companies in the trade in materials from conflict areas since 2010.
The situation in Austria: The NGO Südwind demands rules at various levels, nationally and internationally. You can sign it here: www.suedwind.at/petition
The SPÖ MPs Petra Bayr and Julia Herr submitted an application for a supply chain law to the National Council at the beginning of March, which should also focus on the issue in Parliament.
Photo / Video: Shutterstock.
