In Germany, voluntary monitoring of supply chain abuses 'has failed'

BERLIN — In Germany, businesses are responsible for monitoring their foreign subsidiaries and contractors for human rights violations on a voluntary basis. But how many actually do it? Just 22%, according to the preliminary results of a survey of larger companies conducted by the Federal Foreign Office.

The German government has been under pressure from civil society groups for years to make such monitoring compulsory. That may now be in the cards: Under the coalition agreement, a survey result under 50% should trigger the government to draft legislation making compliance compulsory.

That is what the ministers of labor and of economic cooperation and development are now pushing for.

“The German government had committed to working out whether companies implement the standards voluntarily,” said Saskia Wilks, a researcher with the Business & Human Rights Resource Centre. “It’s obvious and clear that voluntary action has failed.”

Calling the results “disappointing,” Development Minister Gerd Müller joined Labour and Social Affairs Minister Hubertus Heil earlier this month in pledging to have draft legislation in front of the Bundestag by the end of August. They said the bill could be adopted by the start of next year.

“The [legislature] has to take action now,” a Labour and Social Affairs Ministry spokesperson told Devex. “German companies must assume responsibility in the fight against child labor and exploitation and comply with their human rights due diligence obligations.”

A draft bill on supply chain accountability leaked from the Ministry for Economic Cooperation and Development last year, but the Labour and Social Affairs Ministry said the Cabinet will draft new legislation, building on the United Nations’ guiding principles on business and human rights.

Endorsed by the U.N. General Assembly in 2011, the principles drew increased attention after the April 2013 collapse of the Rana Plaza in Bangladesh. The eight-story building was crowded with clothing factories serving multinational corporations, which turned a blind eye to violations of worker protections in their push for cheaper prices.

The principles called for countries to produce national action plans to regulate the activities of their domestic businesses abroad under international law, although they are not compelled to do so.

Because discussions are only beginning, the Labour and Social Affairs Ministry spokesperson said they could not comment on the specifics of the bill currently under discussion. But they emphasized that “it is important that environmental protection and the fight against corruption are also covered whenever human rights are affected” by these things.

Wilks said it was critical that any legislation set clear responsibilities for companies in all sectors to conduct human rights due diligence, that it include liability for harms, and that there be an opportunity for any potential victims to seek redress in German courts.

Many large corporations have lined up behind the calls for legislation, including industry giants like KiK, which produces clothes and home furnishings, and food distributor Nestlé. But the Confederation of German Employers' Associations, or BDA, put out a press release bashing both the survey, which it said set overly onerous compliance standards for the participating companies, and the potential adoption of any legislation, particularly in the midst of the COVID-19 pandemic.

“International trade and supply chain relationships through the measures against the coronavirus have already been largely hampered, if not stopped,” BDA said. “Special national routes with national burdens must be avoided in order not to delay the already difficult economic recovery even more.”

Even within the Cabinet, there is a push to shift the responsibility for any legislation from Germany to the broader European Union. Federal Minister for Economic Affairs Peter Altmaier issued a statement warning against “a national patchwork and the associated distortions of competition within the EU.”

Wilks said there is room for both German and EU-wide legislation.

“It is important for Germany, which currently holds the presidency of the EU Council, to lead on national-level laws,” she said. “That sends an important signal to the EU.”