The German Supply Chain Due Diligence Act will come into force on January 01, 2023 – a milestone for strengthening and protecting human rights and environmental standards along global supply chains. At the same time, negotiations for an EU-wide supply chain regulation – the Corporate Sustainability Due Diligence Directive – are in full swing. This means corporate due diligence obligations will finally become binding – a long overdue measure.
However, in the current debate surrounding the legal regulations, the focus is primarily on the potential challenges for German and European companies. What is often overlooked is what the developments are really about: Improving living conditions along global supply chains and strengthening the rights of those affected. We must live up to this commitment – with the German Supply Chain Due Diligence Act, as well as with regard to the planned EU Supply Chain Law.
Because the grievances in the global value chains with over 450 million employees are huge. Many of the products and raw materials for the German and European markets are produced or extracted under intolerable environmental and working conditions, for starvation wages or even with the help of exploitative child labor. According to the latest figures from the International Labor Organization (ILO), 27.6 million people worldwide work under forced labor, including more than 3.3 million children.
Vulnerable and marginalized groups in particular, like women and girls, often experience multiple discrimination and gender-based forms of violence in all sectors – be it as seamstresses in textile factories, farmers in the fields, or in the service sector. The COVID-19 pandemic further exacerbated this gender-based inequality.
The negative impact on the environment is also enormous: Textile production, for example, uses 43 million tons of chemicals per year. Factories release these directly into surrounding waters via their wastewater, endangering the health of people in neighboring communities in the process. The textile sector also accounts for more than a third of the microplastics in the world’s oceans.
However, human rights violations and environmental damage do not only occur in faraway places, but also in Europe, for example in the form of exploitation of migrant workers in German slaughterhouses.
All these examples make it clear: Corporate due diligence laws must be effective above all where human and environmental violations occur. But how do we achieve this desired efficacy – especially in view of the EU directive?
- Those affected by human rights violations require effective legal options. Civil liability in EU regulation is therefore essential. This will particularly benefit vulnerable or marginalized groups such as women, who suffer most from low wages and violence in the workplace. The design of liability standards is also crucial: We need a fair distribution of the burden of proof: It cannot be that affected persons have to prove that an international company has failed to fulfill its due diligence obligations – in most cases, this will not be possible at all. In addition, as also provided for in the German Supply Chain Act, it must be ensured that non-governmental organizations and trade unions can enforce the rights of those affected in civil proceedings in their own name – an important provision for reducing legal hurdles.
- Grievance mechanisms as part of corporate due diligence must be accessible to all potentially affected rights holders. This also applies to civil society organizations and trade unions. At the same time, whistleblowers must be protected from reprisals. Only in this way can effective remediation and redress succeed.
- The scope of the draft EU Supply Chain Act must not be limited to “established business relationships” in the area of indirect suppliers. This construct creates false incentives. Informal or short-term business relationships in particular pose a higher risk of human rights violations. This is particularly evident in the textile sector, where rapidly changing contractual relationships are commonplace and, at the same time, exploitation of seamstresses and sewers is not uncommon. We therefore need an internationally recognized risk-based approach.
- The protection of the climate and the environment must also be extensively included in the due diligence obligations. This is particularly important for the survival of people in developing countries, who already suffer the most under the impacts of climate change. However, the transition to an eco- and climate-friendly economy can only succeed if everyone participates in this “Just Transition” – and European companies in particular play a central role here.
For what is really at stake – better working and living conditions along global value chains – we need government and corporate commitment as well as clear and effective legal frameworks. Of course, this cannot be done without the necessary support. That is why the BMZ currently expands existing national offers for companies and civil society to the EU level. Because one thing is certain: We will only achieve effectiveness if private and voluntary instruments, on the one hand, and government and binding instruments, on the other, interlock – in the interests of those affected in our value chains.
Baerbel Kofler is a trained banking specialist, computer scientist, Ph.D. linguist, and member of the Social Democratic Party (SPD). She has been a member of the German Bundestag since 2004. From 2016 to 2021, she served as the Federal Government Commissioner for Human Rights Policy and Humanitarian Assistance at Germany’s Federal Foreign Office. Since the beginning of the governing “traffic light coalition”, she has been Parliamentary State Secretary in the Federal Ministry of Economic Cooperation and Development.