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Corruption and the Supply Chain Act

At the end of November 2020, the Swiss people’s initiative “For a responsible company failed to protect people and the environment” (corporate responsibility initiative) on stands and more. Although a broad alliance campaigned for new rules for Swiss-based companies operating abroad and non-governmental organisations had long worked towards the vote, following the failure of the initiative, Switzerland now receives significantly weakened group liability with the entry into force of the indirect counter-proposal.

This is probably due not only to the unconfirmed eight million francs that opponents of the initiative had reportedly put into the fight against the initiative (there is no transparency about political financing in Switzerland), but also to the economic lobby’s manslaughter arguments: as is so often the case when the rules of the game for the economy are to be tightened, it meant, among other things: the competitiveness of Swiss companies would be weakened if it were assumed that jobs could disappear, the general conditions for the economy are already bad (in this case because of Corona), it threatens the departure of multinational companies.

Similar to Switzerland, the business lobby in Germany argues. The result : instead of imposing a harsh law on multinational companies and improving the situation of millions of people around the world, a toothless paper tiger has been created. The economy wins, human rights lose. In addition, it becomes clear once again how strongly the business lobby intervenes in politics-and how gladly politics offers it a hand.

“The strongest law in Europe”

In mid-February, Federal Labor Minister Hubertus Heil presented the draft law, which is intended to oblige companies based in Germany to comply with human rights as well as social and environmental standards in their global supply chains. Heil described the bill as a “historic breakthrough”. Superlatives followed at a media conference: the German supply chain law was “the strongest law in Europe"and” a striking sign". Only: nothing will come of it. This is shown by a research of the political magazine “Monitor”.

In a years – long lobbying process – including close cooperation with the Ministry of Federal Minister of Economics Peter Altmaier-little has been left of the formerly ambitious draft of the German Supply Chain Act, which is to come into force in this legislative period. “What has been announced here is a slap in the face for human rights and environmental protection, “Viola Wohlgemuth from” Greenpeace “tells"Monitor”. You can see the stamp of the business associations from Germany. These would have led the monastery of Altmaier. What is now presented as a supply chain law is a hollowed-out paper tiger.

In bed with the business lobby

This criticism comes not by chance. “Monitor” is the correspondence of recent years between business associations and the federal government. Among them: e-mails, statements, demands. The conclusion of “Monitor”: “The associations apparently had a powerful ally: Federal Economics Minister Altmaier.“We know each other personally, the letters are headed with the title “dear Peter”.

There are better examples: For example, the German Chamber of Commerce and Industry wrote in June 2019: “We would like to thank your house in particular for being prepared to bring in the economic perspective within the framework of the departmental discussions.“The Minister of Economy replied:” The clear positions of your house have been and are helpful for this.“And: “I am confident (…) that it will succeed together (…) to lead the process to a good result for all parties involved.”

Coalition mps also comment that the supply chain act should be prevented from the outset. For example, Frank Schwabe of the SPD: “The Ministry of Economic Affairs has tried everything to undermine this process and to ensure that in the end nothing comes of it.“The whole thing was done in close consultation with the associations of German industry.

Human rights cost 0.005 percent of annual sales – and should still be too expensive

Two years ago, for example, the Employers ' Association warned in a letter that the “regulations would cause the greatest damage to German companies” when they were implemented. The law leads to"high costs, new bureaucracy and liability”. The EU Commission had calculated how much such a regulation would cost a large company: on average about 0.005 percent of annual sales.

The talk about the high costs is thus “a typical lobbying behavior with the aim of torpedoing or weakening the law”, says Prof. Achim Truger, expert economics, to “Monitor”.

Corona pandemic as pseudo argument

As in Switzerland, the German business lobby received a new argument about a year ago with the corona pandemic. In a letter to CDU group chairman Ralph Brinkhaus in June 2020, the business lobby writes that Germany is in the"biggest crisis since the Second World War”. There is “no prospect of a rapid recovery, especially not with additional bureaucratic and financial burdens from a supply chain law”.

An attitude that Marcel Fratzscher by the German Institute for economic research, to “Monitor” as “absurd” means: “in such difficult times, we should be aware of how important it is to adhere to high ethical Standards.“Moreover, it is not just about ethical standards. This is money well invested. Ultimately, the law is also in the interest of German companies, which would also live on their reputation internationally. “Therefore, one should not advance Corona here as a pseudo-argument.”

The fact that the unbridled global economy and the ruthless exploitation of nature is also a driver of pandemics is also falling under the table in the argument of the business lobby.

Attenuate instead of prevent

The research by “Monitor” also shows how the business lobby reacted once it became clear that the supply chain act can no longer be prevented. She tried to weaken it massively. In a letter from August 2020, she called for a “SME – friendly design” of the law-so suddenly it should only apply to large companies. Other claims concerned a limitation of due diligence obligations to direct suppliers and the waiver of civil supply chain liability.

When the responsible ministers presented their supply chain law to the public, they had written the central demands of the business associations almost one to one into their “strongest law of Europe”. From 1 January 2024, the law will only apply to companies with a threshold of 1000 employees. This means that the law does not affect 7’100 companies as originally planned, but suddenly only 2’900 companies, calculates “Monitor”. That’s less than half.

Nor do the remaining companies have much to fear. If the companies initially still check their entire supply chain for compliance with human rights as well as social and environmental standards, there are now no more action obligations for the German companies with indirect suppliers.

Even worse with civil liability, which would have made it possible for victims of human rights violations or environmental damage to claim simple damages in German courts: it was completely deleted in the draft law.

Human rights as “left-ideological topics”?

This means that there is not much left of the German Supply chain Act, which was to become a “striking sign”. Nevertheless, Federal Economics Minister Altmaier says that it was not his intention to water something down. “It was my intention to focus the length so that it would benefit human rights protection.”

And the business lobby, which has nevertheless enforced all its central demands and massively watered down the law, is still not satisfied. In February 2021, for example, the Economic Council of the CDU demanded that the supply chain law must be stopped in the Bundestag – and even writes about “left-ideological topics” that the SPD is stubbornly working on, while numerous companies have existential fears.

Human rights as left-ideological issues? Anyone who misrepresents reality in this way is out of place in drafting a law that seeks to enforce human rights.