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German Economics Ministry Blocks Effective Supply Chains Law

Companies’ Respect for Rights at Particular Risk During Covid-19

Workers sew clothes in a garments factory in Dhaka, Bangladesh, July 25, 2020. © 2020 Salahuddin Ahmed/Sipa via AP Images

This would have been the week: The German government had put the planned Supply Chain Act on its cabinet meeting agenda. If passed, the law would require companies to ensure that the rights of workers and communities in their supply chains are respected. But after the Federal Ministry for Economic Affairs and Energy (BMWi) blocked the law, the cabinet postponed its debate.

A robust law would require companies to assess, mitigate, prevent, and address human rights and environmental risks along their supply chains in accordance with the United Nations Guiding Principles on Business and Human Rights. This is sorely needed. Over 80 percent of German businesses do not to take these steps or do so insufficiently, as government monitoring recently brought to light. 

Child labor, environmental destruction, and labor exploitation remain a concern when metals are mined, clothing is produced, or food is grown in global supply chains. During the Covid-19 crisis, the situation for many seamstresses in Asia and miners in Africaand their families – has worsened.

The BMWi, however, is calling for a law that would apply to very few companies (only those with 5,000 or more employees) and fail to require companies to take environmental measures or hold the companies liable – it would be a toothless tiger.

Opposite the BMWi, both the Labor and Development Ministries have been following the bill and are keen to ensure that companies are required to protect human rights along the entire supply chain, in accordance with the UN Guidelines. The BMWi also faces a broad alliance of more than 100 civil society organizations and unions, including Human Rights Watch. And finally, companies such as Tchibo, Ritter Sport, Nestle, and others explicitly support a law requiring human rights and environmental safeguards along the whole supply chain.

The cabinet is now scheduled to meet on September 9. It is hoped that the BMWi will have changed its position by then. Passing a robust supply chains law in Germany would signal that in the world’s fourth largest economy, the human rights of people at the bottom of supply chains count.

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