Of Criticism and Hope: The Supply Chain Law
We don’t just sell beautiful and sustainable things. We also engage personally and politically with the system in which they arise. We want to share the thoughts we have on this with you here.
Can ethical consumption improve the world? One narrative that persists is that of the checkout slip as a ballot. It is popular with those who criticize the restrictions of free economy in particular. Change your consumption first, they say, then you’ll have some leverage. The free market will take care of it.
“This law is only a pale shadow of what it originally was and what it could be – and we won’t let them get away with that.”Eva-Maria Schreiber, die Linke
With this narrative, however, the power to change is shifted onto consumers. In principle, though, it is the task of the state to protect human rights, as the German constitution states.
Germany now finally has a supply chain law; it was passed in the Bundestag by 412 votes to 159. However, the Left Party in particular abstained.1 The reason, according to Left Party MP Eva-Maria Schreiber, is that “this law is only a pale shadow of what it originally was and what it could be – and we won’t let them get away with that.” 2
The shortcomings of the law
Is that true? A closer look reveals: This law makes huge distinctions in which people are considered worthy of protection and which are not. Companies are only responsible for their direct contractual partners. For all other indirect suppliers such as raw material suppliers, “companies only have to take action if they receive indications of violations. […] This supply chain law will therefore not protect textile workers, dyers or cotton farmers who are at the beginning of the production chains from human rights violations.” 3
This can also be seen as an “incentive to look the other way”, 4 because the less is known about drawbacks in supply chains, the less companies have to do about it. If you look at the supply chains of fashion companies, for example, it quickly becomes clear how complicated the global system of suppliers and subcontractors has become in our present day. The whole thing now resembles a complex, sometimes impenetrably interwoven network rather than a linear chain.
Compared to the French supply chain law, the Loi de vigilance, the German law also lacks civil liability – “and thus the possibility for victims of serious human rights violations to sue for damages in German courts.” 5 German companies only face fines in case they violate the law. The supply chain law also does far too little to incorporate the environmental aspect. For example, the law does not even include environmental destruction caused by production and raw material production or extraction, nor does it take the climate into account as a protected good.
In the course of the last year and a half, there have been a number of discussions about the draft supply chain law; former Economics Minister Peter Altmaier in particular has opposed it, as have a number of business associations. The law has been called a “bureaucratic monstrosity” – or even “the stupidest law passed by the grand coalition.” 6
The original plan was to require companies with 500 or more employees to audit their supply chains. The law that has now been passed will only apply to companies with more than 3,000 employees from 2023 onwards – i.e. 600 companies across Germany, instead of over 4,300 as has originally been planned.
Supply Chain Law goes Europe
“We fear that we will get more resistance in the EU Council of Ministers because of the weak law in Germany. Germany has a lot of power there. The worst scenario would be that the German government in the Council weakens the European proposal as it did in Berlin.”Anna Cavazzini, Green Party Germany
A new hope of the activists is a supply chain law at the EU level that would apply to all companies on the continent. Nevertheless, Green Party politician Anna Cavazzini fears “that we will get more resistance in the EU Council of Ministers because of the weak law in Germany. Germany has a lot of power there. The worst scenario would be that the German government in the Council weakens the European proposal as it did in Berlin.” 7 And the lobbyists in Brussels are also back in the starting blocks. They will try to water down the law as much as possible in the interests of their business and trade associations.
At the moment, however, the draft still looks pretty good: Companies will have to check their entire supply chains for malpractices, an environmental due diligence obligation is also included, and companies, even smaller ones, will have to be liable for malpractices.8 However, it will certainly be several years before the law is effective – years that are unreasonable for workers in large parts of the supply chains. And a vote of the bill was just postponed for the third time, without giving any reasons, by the EU Commission.
Therefore, the next German government must urgently improve the supply chain law: Companies must be obliged to check their entire supply chains for human rights violations, take action in the event of abuses, and the environmental aspect must be included in the law.
Illustration: © Tanya Teibtner