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Hanging by a thread: what’s right – and wrong – with the new German supply chain law meant to protect human rights

After years of civil society campaigning against the working conditions of supply chain workers in the Global South supplying German companies and consumers, the German government recently agreed to the introduction of a human rights due diligence law. The law, supposed to force companies to ensure the human rights of these workers and affected communities in countries abroad, will likely be passed before the summer. But unless the parliament makes substantial changes, the law in its current form will not be enough to hold companies responsible. Furthermore, it fails to ensure that the voices of those affected most are heard, writes Josephine Valeske.

Credit: Solidarity Centre

In September 2012, 258 Pakistani workers were killed in a factory fire of a company that supplied garments mainly to German textile discounter KiK. In the aftermath, a survivor and three families of some of the victims filed a lawsuit against KiK under Pakistani law, claiming that the company should bear responsibility for the fire safety deficiencies in the supplier’s factory. After a legal battle of several years, German courts denied compensation since the case had lapsed according to Pakistani law.

From poisoning drinking water in Peru resulting from the German car industry’s copper mines, to expelling 4,000 people from their homes in Uganda to make room for a coffee plantation, to chemical company BASF doing business with a mine in South Africa despite 34 of its workers being shot during a strike, German companies almost routinely make headlines for their involvement in wrongs that they would not be able to get away with back home. A 2015 study from Maastricht University found that Germany ranks fifth globally for the number of companies in the country involved in human rights violations abroad.

The German example provides insight into how things can go very wrong even in countries that are supposed to rank highly in terms of safeguarding human rights. It seems that here, human rights assurance is selective, linked to citizenship rather than to being human. What else could explain the failure to also look after those linked indirectly to Germany, such as through supply chains?

Unfortunately, these are not standalone incidents, but manifestations of a system in which Western retailers, always in search of the cheapest suppliers, use workers’ vulnerabilities and weak legislation in other countries to push prices ever lower. While benefiting from an unequal global labour division, they pay lip service to the interests of those affected by their business activities and shift the responsibilities for upholding human and workers’ rights to their suppliers in the Global South.

A new supply chain law agreed on by the German government is supposed to change the extent to which participants in global supply chains serving German companies are protected. Called the ‘Lieferkettengesetz’ (supply chain law), the law is supposed to ensure that German companies perform due diligence in their supply chains and that those who are guilty of human rights violations are held responsible. This law is considered progressive, as it is one of the first that looks beyond country borders to the rights of those also indirectly linked to the country. German CSOs underscored the fact that the mere decision in favour of a supply chain law is a win, but its usefulness will have to be judged by whether it actually yields any change for the affected people on the ground. The law still has to be approved by parliament, which, depending on the MPs’ susceptibility to corporate lobbying, might either strengthen it slightly or weaken it further. What’s clear is that the law in its current form will not change the lives of those toiling under precarious and unsafe conditions in distant countries.

A toothless tiger

The international legal framework is massively biased towards corporations: under ISDS mechanisms, companies can sue governments for billions for negatively changing the investment climate and even for protecting workers if that harms their expected profits. But barely any legal mechanisms can be identified that allow to hold companies accountable for human rights violations incurred in other countries where their suppliers are located.

Following increased reporting on the role of German companies in human rights violations, German civil society led by a coalition of non-profit civil society organisations (CSOs) have been lobbying for years for a human rights due diligence law that would change how workers abroad are treated. Finally, the government came to an agreement on a law in mid-February. But the CSOs faced a massive corporate lobby on the other side that maintained a stronghold over the Ministry of Economic Affairs, evidenced by the fact that the German Minister for Economic Affairs, Peter Altmaier, exchanged regular emails on first-name basis with a corporate lobbyist. The corporate lobby was able to influence the law so that in its current form it remains a largely toothless tiger. Here are some of the ways in which the current proposal is failing those it’s supposed to protect:

The law lacks a civil liability provision that enables affected people abroad to directly take legal steps against German companies for human rights violations. Instead, an agency forming part of the German Ministry of Economic Affairs will examine whether companies adhere to their due diligence duties and can fine them for the failure to do so. NGOs and unions will have the possibility to file lawsuits in Germany in the name of victims under certain circumstances, but ultimately the victims cannot take action themselves.

It is still unclear whether the law will extend to more than the first-tier suppliers, which means that a vast number of human rights abuses further down the supply chain will likely remain unaddressed. The law mandates companies to take action further down the supply chain if they have substantiated reasons to believe that there are human rights violations, but it does not define what substantiated reasons are. For example, is it enough to know that children work under horrific conditions in Congolese mines that supply raw materials for batteries, or does a German battery company need to know specific details about its individual supply chain to be compelled to act?

The law will only apply to the roughly 600 companies that employ at least 3,000 staff members from 2023, and to around 2,900 companies with more than 1,000 staff members from 2024. It therefore overlooks more than 99% of German companies that belong into the category of small and medium enterprises (SMEs), many of which are operating in high-risk sectors such as the chemical or the textile industry. Furthermore, it does not include foreign-owned multinationals that conduct business in Germany, even if a large share of their profit comes from the German market.

The law does not reflect the wishes of the German public. The final compromise is disappointing and also blatantly undemocratic, since a survey had shown that 75% of Germans were not only in favour of a due diligence law, but wanted this law to include legal mechanisms to hold corporations liable for human rights violations, which are currently absent.

To top it all off, there’s a massive elephant in the room: apart from being structured by class, nationality and income, global supply chains are racialised, with people of colour dominating the lower value-added positions and supply chains becoming increasingly white as the value-added increases. Thus, people of colour are at the receiving end of the human rights violations the law was supposed to prevent. It’s not just a form of injustice – it’s blatantly racialized injustice.

Our inputs can help shape the law

The German due diligence law in its current form may be a disappointment, but there are signs of hope: similar processes are happening in other countries and at the international level. For example, the Legal Affairs Committee of the European Parliament recently adopted a report requesting the European Commission to submit a formal proposal for a EU due diligence law that might include liability measures holding those responsible accountable at the EU level. Furthermore, the ongoing UN Treaty process, driven largely by affected communities from the Global South, aims to develop a binding legal treaty between the United Nations members to hold transnational corporations globally accountable.

And we still have the power to help change the law in its current form. So what can the public in Germany and elsewhere do while the law is still being negotiated? Stay updated about the current process on the CSO coalition’s website or Twitter account, and on the website of the European Center for Constitutional and Human Rights (in English). Subscribe to the Business and Human Rights Resource Centre’s multilingual newsletters to stay updated about general developments in different countries. The German CSOs will soon announce specific actions targeting parliamentarians. Finally, you can directly contact your local parliamentary representative and tell them why you think that an effective due diligence law is important.

About the author:

Josephine Valeske

Josephine Valeske holds a MA degree in Development Studies from the ISS and a BA degree in Philosophy and Economics. She currently works for the research and advocacy organisation Transnational Institute in Amsterdam. She can be found on Twitter @jo_andolanjeevi.

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