Global supply chains: Who monitors human rights and environmental performance?

Goods travel along international supply chains all round the globe. Companies locate their production wherever costs are lowest. End consumers are often interested primarily in low prices, and those living where the global operations start pay the price: the workers, who produce the goods under conditions that frequently violate human rights and harm human health and the environment.

There are often significantly laxer environmental and social standards in the producing countries than in Germany, a fact which is exploited by global corporations. They use pesticides which have long been banned in Germany. Where working conditions in factories are concerned, they circumvent the internationally recognised minimum standards of the International Labour Organization (ILO) – not to mention the occupational safety guidelines that apply in Germany.

Guiding principles to uphold human rights

However, as long ago as 2011, the German federal government accepted the UN Guiding Principles for Business and Human Rights, 31 principles formulated by the international community which are in turn to be implemented in national action plans.

The signatory states are committed to the protection of human rights. In addition, the Principles appeal to corporate responsibility to observe human rights in their overall supply chain management. Those suffering violations of human rights due diligence obligations should be able to seek redress both in and out of court.

Voluntary solutions instead of statutory obligations

Yet, instead of translating the Principles into law and compulsory regulation for businesses, the German government is relying in its action plan on voluntary solutions. These, however, are mostly implemented only by firms which in any case feel a commitment to corporate social responsibility (CSR). What is needed, in contrast, is the introduction of binding human rights due diligence obligations that also include a monitoring system throughout the supply chain.

What is lacking, too, is any equivalent to the UN human rights principles that would apply to environmental issues, and so German companies in non-EU countries regularly circumvent European environmental legislation. Furthermore, environmental performance and human rights often go hand in hand, since whatever harms the environment also poses a risk to people at work.

Donor project: Protecting the environment safeguards human rights!

The Oeko-Institut project on the theme of “Protecting the environment safeguards human rights! German businesses in global responsibility” shows that upholding social standards and protecting the environment are issues which require a combined solution. This project has been funded through private donations; such donations enable us to research subjects that we have not been commissioned to study, but which are nevertheless important.

For example, with the aid of three case studies, our researchers have shown how German businesses flout European environmental directives when they operate in other countries.

Banned pesticides, hazardous shipbreaking, toxic copper mining

German companies continue to export pesticides that are not licensed in the EU to countries outside Europe. Many of these chemicals are extremely toxic on direct contact, while others are carcinogenic, cause genetic damage or disrupt the hormonal balance. There are proven negative impacts on both humans and flora and fauna. Despite this, German firms trade in these products.

German shipping companies send ships to Bangladesh for scrapping. There these are mostly dismantled on the open beach – with no protective clothing and without isolating hazardous materials. This results in serious accidents and pollution of the sea with heavy oils and asbestos. The shipping companies take no responsibility for the environmental damage.

The third case study deals with copper mining in Peru, which for years has been causing severe harm to people and the environment. As well as leading to health problems, mining operations often also violate human rights through forced resettlement, restrictions on the right to demonstrate and curbs on press freedom.

The government’s obligation to improve sustainability

The study concludes that government must intervene. Compulsory statutory regulations rather than voluntary agreements are vital to create a level playing field for businesses. National or European legislation on better environmental protection and human rights can lead to improved global standards as well.

Human rights due diligence obligations must apply in all sectors and throughout the value chain. In order to achieve this, businesses should be compelled to carry out risk analyses and risk management. This will create the necessary transparency and should be monitored by the authorities. Furthermore, those affected must be given access to legal enforcement of their compensation claims – in German courts as well.

The case of France demonstrates that it is possible to compel companies to human rights due diligence. Since 2017 larger firms have had to identify risks to people and the environment for their entire value chain and take preventive action. Infringements carry the threat of heavy fines.

Oeko-Institut working paper: “Umweltschutz wahrt Menschenrechte! Deutsche Unternehmen in der globalen Verantwortung” (in German language)

Oeko-Institut summary: “Umweltschutz wahrt Menschenrechte! Unternehmen und Politik in der Verantwortung” (in German language)

Project: The Partnership for Sustainable Textiles – ambitious and transparent?

Sustainably produced textiles do exist. They carry labels such as TransFair’s Fairtrade mark or the Global Organic Textile Standard (GOTS). Even before the collapse of the Rana Plaza garment factory in Bangladesh in 2013, it was clear that working conditions that violate human rights are common practice in the textile industry. Yet only afterwards was the need for urgent action recognised.

In Germany Gerhard Müller, the Minister of Development, launched the Partnership for Sustainable Textiles in 2014, with the aim of ensuring voluntary minimum standards for fair and sustainable textiles manufacture. The civil society members of the Partnership have commissioned the Oeko-Institut to examine whether the aims are being achieved and where there is need for improvement.

More specific targets, greater transparency

In principle the Institute welcomes the adoption of compulsory targets of this sort in the Textiles Partnership. However, with regard to the formulation of the targets, the Oeko-Institut research team found scope for improvement. The criteria are not specific enough and allow too much room for manoeuvre in formulating and implementing measures. There is still also a lack of transparency.

The team recommends a complaints mechanism for the lower end of the supply chain, at the production source. This would enable a cotton grower in India or a seamstress in Bangladesh to take any grievance directly to the German textiles company.

Recognise ambitious companies, implement minimum requirements

The researchers identified the voluntary nature of the Partnership as a failing. Compulsory regulations would be more effective for the whole textiles industry. Yet be this as it may, in order to make progress within the current framework it is important to recognise the companies which are already making ambitious efforts towards greater sustainability. Thus other firms can see that it is entirely possible to improve environmental and social conditions.

Oeko-Institut report: “The Textiles Partnership: ambitious and transparent?” (PDF version, in German language)