Background information How Germany is promoting fair supply chains

Germany’s supply chain law serves to implement the UN Guiding Principles on Business and Human Rights and the coalition agreement of the current German government in a binding way.

Cashew processing in Ghana

Supply chains Internal link

In 2011, the United Nations adopted the Guiding Principles on Business and Human Rights (External link). They are intended to prevent human rights being violated by companies and they define the state’s duty to protect and corporate responsibility to respect human rights throughout gobal supply chains.

Initially, the German government relied on voluntary commitments in order to implement the UN Guiding Principles. In 2016, it adopted the National Action Plan for Business and Human Rights (External link) (NAP) and established a review mechanism. It was found that not enough companies were meeting their human rights due diligence obligations.

In the first company survey in 2019, only 400 of the more than 3,000 companies invited to take part completed the questionnaire. Only 20 per cent of these 400 companies were complying with the NAP requirements. In a second survey in 2020, 450 of the 2,250 companies invited to take part responded to the questionnaire; only 17 per cent of them were shown to be compliant.

The NAP envisages that the Federal Government will consider further action, up to and including legislative measures, if less than 50 per cent of companies are compliant with human rights due diligence obligations. In their coalition agreement the governing parties CDU, CSU and SPD agreed that legislative provisions would be put in place if companies’ voluntary commitments proved insufficient. This legislation was passed in June 2021.

With the supply chain law, the UN Guiding Principles on Business and Human Rights and the coalition agreement are now being implemented by the German government.

Our goal Fair and sustainable supply chains in Europe and worldwide

The goal being pursued by the German government continues to be a uniform European set of rules. It is seeking to influence EU legislation with its national law – also in the interests of German businesses.

Many companies are themselves calling for a binding legislative framework on corporate due diligence. Some countries, such as the United Kingdom, France and the Netherlands already have such a framework.

During its 2020 EU Council Presidency, Germany supported the initiative by EU Justice Commissioner Didier Reynders on binding provisions for corporate due diligence at EU level and an EU regulation on deforestation-free supply chains.

EU-wide regulation would provide all companies with legal clarity, legal certainty, transparency and a level playing field, helping also to eliminate potential ills on the ground in producing countries.

The German government is not, however, willing to wait until overarching European rules have been put in place. That is why it has passed a national due diligence act that is aligned with international standards like the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, which provide guidance and standards for responsible supply chains. This is setting standards and can provide support and significant input for planned EU legislation.

In addition, Germany is calling for human rights and environmental standards to be verifiably enshrined in EU trade agreements. This includes sanctions if the applicable sustainability chapters in trade agreements are disregarded.

The World Trade Organization (WTO) must evolve into a fair trade organisation. The document establishing the WTO – the Marrakesh Agreement – already emphasises sustainable development and the protection and conservation of the environment as key goals. However, to this day, this triad is lacking in world trade. Even if companies destroy the environment or tolerate exploitative child labour in their production processes, they receive the same treatment under commercial law as companies that meet all ecological and social standards.

That must change as a matter of urgency. If someone violates international standards such as ILO core labour standards the Paris Agreement or the Convention on Biological Diversity, for instance, they need to lose their right to equal treatment.

Provisions must be put in place so that non-compliance with international standards leads to disadvantages in the EU single market. Germany already offers more support to developing countries and emerging economies that meet the various standards.

Enforcing international agreements

The Universal Declaration of Human Rights was adopted with an overwhelming majority by the UN General Assembly in 1948. It stipulates in article 1 that “All human beings are born free and equal in dignity and rights.” Article 23 guarantees that “everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.”

The UN Convention on the Rights of the Child from 1989 lays down the right of the child to be protected from exploitation. The binding ILO core labour standards from 1999 have been ratified by 182 countries and set out international standards for the protection of children. In the 2030 Agenda (SDG 8) the UN member states committed in 2015 to eliminate of child and forced labour.

The OECD Guidelines for Multinational Enterprises lay down principles and benchmarks for responsible business conduct in a global context. They cover human rights, social issues, the environment, anti-corruption, taxes, consumer interests, reporting, research and competition. Implementation of the guidelines, however, is voluntary.

Since 2011, the UN Guiding Principles on Business and Human Rights have provided clear minimum standards for supply chains that are socially and ecologically friendly and free of child labour and environmental degradation.

The EU CSR Directive and the EU Conflict Minerals Regulation have spelled out in greater detail corporate risk management and first standards for the respect of human rights for individual global supply chains.

At the 2015 G7 Summit in Elmau, developing fair supply chains was a central issue in the final document. This was reaffirmed by the G20 in 2017 and 2018: companies must meet their due diligence obligations!

Seamstress in the textile factory of the Desta Garment company in Addis Ababa, which produces for a German retail chain, Ethiopia, 2.12.2019

Seamstress in the textile factory of the Desta Garment company in Addis Ababa, which produces for a German retail chain, Ethiopia, 2.12.2019

Seamstress in the textile factory of the Desta Garment company in Addis Ababa, which produces for a German retail chain, Ethiopia, 2.12.2019

Videos

Still from the video "Achieving fair incomes"

Achieving fair incomes

In the Global South, in particular, from where we source many of our agricultural commodities, despite their hard work many farmers and their families do not have enough money. In many cases they do not even have enough for the food they need – and children must work and cannot go to school.

In order for the situation of these families to change in the long term, all actors must play their part: farmers’ cooperatives, companies, governments and civil society organisations in both the producing and the consuming countries.

This video explains how we are working together with all the actors to achieve fair incomes.

Still from the video "Is soy farming harmful to the climate?"

Is soy farming harmful to the climate?

The cultivation of soy has a negative impact on the environment, the climate and on small farmers. This animated BMZ film explains what we can do about this.

Pro-Planteurs
On the road to a sustainable cocoa sector

On the road to a sustainable cocoa sector

Its market share of 40 per cent means that Côte d'Ivoire is the biggest cocoa producer in the world. The country has 800,000 small farmers who cultivate cocoa trees. Cocoa is an important commodity for the country; it plays an important role in economic and social terms. Yet the cocoa sector is facing considerable challenges.

With its Pro Planteurs project, the German Initiative on Sustainable Cocoa wants to contribute to increasing sustainability in the cocoa industry.

Côte d'Ivoire
Still from the vdeo "German Initiative on Sustainable Cocoa"

German Initiative on Sustainable Cocoa

In Côte d’Ivoire cocoa is mostly farmed in remote rural areas. In many cases, the plantations are old and their productivity is low, not least because farmers are using outdated agricultural practices.

That is why the members of the German Initiative on Sustainable Cocoa have developed training material and are offering training activities. This gives farmers the chance to learn how to make farming profitable.

INA
Still from the video "Coffee and honey from Ethiopian forests"

Coffee and honey from Ethiopian forests

In Nono Sale, a district in south-western Ethiopia, the Federal Ministry for Economic Cooperation and Development (BMZ) is promoting the development of a sustainably operating farming region in cooperation with local actors. Sustainable harvesting of forest products, especially coffee and honey and bee products, can increase peoples’ incomes and protect the natural forests.

Farmers receive support in the form of training and other measures that help them improve the quality of their products. Farmers are linked up with new markets for forest products in close cooperation with partners from the private sector who are involved in the initiative for sustainable agricultural supply chains.

Forest protection
Still from the video "Deforestation-free supply chains"

Sustainable supply chains through forest protection

Forests are vital not only for the survival of plants and animals but also for us humans. More than 1.6 billion people depend directly on forests. And yet, we are continually slashing trees and destroying forests for growing consumption needs. This land is then used for growing agricultural commodities such as soy, palm oil, rubber, cocoa and coffee. Many companies and governments have realised that this cannot continue. They have committed to developing deforestation-free supply chains.

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