Few German companies are ensuring basic labor and human rights standards are respected in the supply chain. That's why two German ministers are now planning a law obliging companies to take responsibility.
A typical bar of chocolate costs a mere €0.80 ($0.91) at a German supermarket. Many of these sweets, however, are produced using child labor. Two decades ago, the University of Chicago launched a research project looking into how many child laborers are employed on the West African cocoa plantationsin Ivory Coast and Ghana. According to the scholars' latest report, 2.26 million children are currently toiling away in the industry — a tragic new record.
"The problem is that industrialized nations externalize, meaning we outsource production to developing countries and thereby undermine the production standards we apply in our wealthy societies," says Germany's Minister of Economic Cooperation and Development, Gerd Müller. Social and environmental standards which are widely accepted in Germany, he says, are violated in this way. "We accept and cement the exploitation of other human beings and nature in developing countries," he says.
Ineffective voluntary commitments
Unfortunately, this grim division of labor has existed for many decades. There have been numerous political efforts to change this reality. Some companies based in developed countries, too, have attempted to ensure basic labor, environmental and social standards are met during the production process abroad. Indeed, German Labor Minister Hubertus Heil of the Social Democrats (SPD) has stressed that "anyone who ensures product standards are met can also ensure human rights are respected."
For fair supply chains: German Development Minister Gerd Müller (CSU, left) and Federal Labor Minister Hubertus Heil (SPD)
According to a survey of over 5,500 large German companies with over 500 employees, voluntary commitments have brought little improvement. A first report published in December 2019 shows that merely 18% of companies surveyed implemented a system to monitor how their foreign-made goods are produced. A later survey showed that 22% of companies had implemented such a monitoring system.
Ministers propose binding law to end exploitation
"The results of the second company survey are once again disappointing," says Minister Gerd Müller. To him, concrete steps are now needed. "We need a legal framework, as stipulated in the coalition agreement, to meet human rights standards that rule out child labor along the supply chain, and ensure basic environmental and social standards are met," Müller stresses.
In 2018, Germany's governing coalition — comprising the Christian Democrats (CDU), Christian Social Union (CSU) and Social Democrats (SPD) — agreed that a law to this end would be passed unless companies' voluntary commitments proved effective. Since this is not the case, Labor Minister Hubertus Heil announced he will table a bill to tackle this problem in August this year. The plan is to adopt the law by early 2021.
German companies must be responsible not only quality control, but also for human rights, says Heil.
Globalization should not imply exploitation
The bill envisions obliging companies with more than 500 employees to ascertain whether their business activities abroad are undermining human rights, and to take counter measures if needed. Moreover, the bill would require companies to publish an annual report on what they are doing to prevent human rights abuses.
"Human rights are universal and the German state, its economy and society, carry responsibility to guarantee they are honored," says Labor Minister Heil. The German economy, in his opinion, is highly globalized and therefore obliged "to take responsibility."
Some businesses support the idea
Over 60 companies have expressed support for the proposed law, among them coffee roaster Tchibo, food manufacturers Rewe and Nestlé, and chocolate manufacturer Alfred Ritter. Pro-business associations, meanwhile, reject the bill. They say companies are already under significant pressure due to the coronavirus pandemic. Foreign trade association BGA, for example, criticizes that "the introduction of a due diligence law would bring us to breaking point and further postpone economy recovery."
"It is assumed that companies have more power than Chancellor Merkel's government when it comes to pushing for human rights," says Steffen Kampeter, who heads Germany's employers' association. In his view, the bill expects too much of companies. He, along with many other business representatives, takes issue with the fact that companies are supposed to be held liable if human rights standards are breached along the supply chain.
Making an effort is key
Labor Minister Heil, however, disagrees. He argues German companies will only be held accountable for foreseeable and thus preventable violations. "We want to oblige companies to make an effort and to do whatever is in their power — if they do this, they will not be held liable," says Economic Cooperation and Development Minister Müller.
While Heil and Müller are keen to see their bill turned into law as quickly as possible, this is anything but certain. Not everyone on Chancellor Merkel's cabinet is a fan of the proposed law. Germany's Minister of Economic Affairs, Peter Altmaier, for instance, thinks little of it.
Should the EU act?
Altmaier has declared all government members would carefully analyze the bill. "We will assess which loopholes exist, and how we can use Germany's Presidency of the Council of the European Union to ensure that across the bloc, all states ensure standards are met along the supply chain," Altmaier said.
Armin Paasch of the Catholic aid agency Misereor says this is exactly the problem. "Moves to shift this debate to the EU level have been and continue to be aimed at postponing the law for years on end," says Paasch. "This will allow actors to block or water down the proposal," he says.
Paasch hopes Müller and Heil will succeed in pushing though their bill. He is convinced that "we need a German supply chain law because this will increase the odds that in two or three years' time a similar EU regulation will be put in place that applies to other member states as well."