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The so-called Due Diligence Act, which will come into force next year, will obligate German companies to check their supply chains for human rights violations, corruption and environmental pollution. Those who are not sustainable and ethical risk heavy fines and, one day, perhaps even claims for damages from affected employees and their families.
But how are you supposed to verify whether individual components are truly ethical? The focus here is on the increasingly economically powerful region of Xinjiang, whose name has already become synonymous with human rights violations. Marcel Grzanna spoke with experts about the practical implementation of the law. Lawyers are sure that feigned ignorance will not protect against legal consequences. The risk of massive damage to a company’s reputation is simply too high.
Fighting ignorance is also the goal of the Great Translation Movement. On its Twitter account, the anonymous collective translates articles from Chinese state media and Chinese social media comments into languages such as English and French. Contrary to the image of a peace-loving nation that Beijing likes to portray to the outside world, some of the content is so inhumane that members of the translation group have to take breaks from time to time to avoid “endangering their mental health”.
These translating dissidents have attracted so many followers in the meantime that China’s government has supposedly even dialed back its strident nationalism somewhat in order to avoid even greater damage to its international reputation. A remarkable turn of events in an authoritarian state that has been forcing its citizens to self-censor for years with a highly sophisticated surveillance apparatus.
Due diligence in the supply chain: focus on Xinjiang
Pacifico Renewables Yield (PRY) has no illusions. The German company, based in Gruenwald near Munich, buys and operates solar and wind parks all over Europe. Any projects it invests in must meet high social and environmental standards. For financing, the company issues green bonds or obtains loans from sustainability banks with the strictest standards.
But when it comes to China and sustainability, especially in the solar industry, CEO Martin Siddiqui knows very well that there are no guarantees. “The majority of components come from China, and there are suppliers who produce with fossil energy, or whose products are made through forced labor,” Siddiqui says. The company works as hard as it can to trace and audit companies further and more precisely along supply chains, the 37-year-old says. However, he cannot guarantee that all the modules installed in his company’s parks have been produced in a 100 percent sustainable manner.
Not even politicians want to force guarantees when the German Due Diligence Act comes into force next year. Commonly referred to as the Supply Chain Act, the law aims to make products and services from German companies more sustainable. Forced labor, human rights violations, corruption, environmental pollution – all of these are to be excluded from the value chain as far as possible from 2023 onwards wherever German companies are involved.