Corporate responsibility

A dangerous pesticide long banned in the EU is on sale in other countries. Copper for German products is extracted at a mine where working conditions and safety standards would certainly be in breach of German law. In Bangladesh, a German ship is broken up in conditions which would never satisfy the requirements of any authority in Germany. German businesses operate around the globe: they have international supply chains and sell their products worldwide. And yet in many cases, they fail to comply with the social and environmental standards that apply at home. What are the consequences of this omission and how can companies be called to account?

In their international operations, German companies often rely on local legislation which falls a long way short of the social and environmental standards, obligations and limits that apply here in Germany. But does this mean that in the absence of proper rules, they are allowed to sell products or make use of services that put human health and the environment at risk? Certainly not, says Dr Nele Kampffmeyer, a Researcher in the Oeko-Institut’s Environmental Law and Governance Division. “In addition to the various national provisions, the UN Guiding Principles on Business and Human Rights have been in existence since 2011. In this document, the international community sets out 31 principles for human rights due diligence. They cover the state duty to protect human rights, the corporate responsibility to respect human rights, and access to effective remedy through judicial or other means for those affected.” All states are encouraged to develop national action plans to implement and disseminate the UN Guiding Principles. “Regrettably, in its action plan, the German government opted for an extremely loose arrangement which is based on voluntary commitment rather than binding rules,” says Dr Kampffmeyer. “However, it is abundantly clear that voluntary solutions will not persuade the majority of companies to fulfil their human rights due diligence commitments in a consistent and comprehensive manner and take the strategic and management decisions that this entails. And companies that give no thought to sustainability will certainly not do so.”

RESPONSIBILITY FOR PEOPLE AND THE ENVIRONMENT

The UN Guiding Principles are an important step towards a sustainable economy. “Unfortunately, there is still no comparable framework for environmental performance,” Dr Kampffmeyer continues. Nonetheless, human rights due diligence is important from an environmental perspective as well. “A lack of environmental protection can lead to human rights violations,” she says. “Many forms of environmental damage have a direct impact on the right to life and health.”

An Oeko-Institut project, entitled Environmental protection guards human rights! The global responsibility of German businesses, therefore looked at how environmental and human rights protection can be integrated more effectively into global supply chains. With reference to three case studies – ship-breaking in Bangladesh, copper mining in Peru and the international sale of pesticides that are banned in Germany – the project team drew up a set of demands for policy-makers and business. “Many vessels operated by German shipping companies are sent to Bangladesh for breaking, generally via middlemen. They are taken apart on the beach, without correct disposal of their components, exposing people and the environment to hazardous substances such as heavy fuel oil and asbestos,” explains Cara-Sophie Scherf, a Researcher at the Oeko-Institut. “This is prohibited by international and European law – and it’s time the German government enforced these rules more rigorously.” Above all, she says, the shipping companies have a duty to address these violations, first and foremost by complying with the law but also by focusing to a greater extent on recycling standards in the leasing of ships. Dr Kampffmeyer is calling for firm action from policy-makers and companies on pesticides and copper mining as well: “For example, there should be an export ban on highly toxic pesticides that are not licensed in the EU,” she says. “And as for copper mining in Peru, companies need to show active commitment and provide funding to improve conditions in the mining countries.”

In addition to measures relating to each of the case studies, the working paper includes recommendations on cross-sectoral instruments. “We believe it is sensible to introduce legally binding due diligence obligations here in Germany, similar to those in place in France since 2017,” says Dr Kampffmeyer. “The French legislation requires major companies to identify and prevent risks to people and the environment all along the value chain. If they violate this obligation, they face very stiff financial penalties.”

MORE RESPONSIBILITIES, MORE RIGHTS

In another project for civil society members of the Partnership for Sustainable Textiles, the Oeko-Institut looked at sustainability criteria for the garment industry. “We analysed how the Partnership’s binding objectives can be implemented with a high level of ambition, showing why clear specifications for risk analyses, more transparency and measures that focus on the downstream supply chain, not only on direct business partners, are useful,” she explains. The report, entitled The Textiles Partnership: Ambitious and Transparent?, also calls for more robust regulation: “The corporate involvement in this voluntary partnership is very welcome. This type of initiative is needed primarily in order to develop practical solutions. In the interests of fair competition, however, all the German garment companies should be obliged to comply with certain minimum standards.”

One of the Oeko-Institut’s other key demands is access to justice for injured parties. “Anyone whose rights have been violated as a consequence of environmental damage caused by a German company, its subsidiary or a supplier should have the opportunity to seek compensation in accordance with German law before a German court,” she says. “This will require the expansion of German corporate liability and easier access to German courts for injured parties from other countries.”

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Sociologist Dr Nele Kampffmeyer’s work at the Oeko-Institut focuses on sustainability governance, the green economy, corporate sustainability strategies and corporate citizenship. In the Environmental Law and Governance Division, she investigates themes such as sustainability in complex supply chains and corporate sustainability reporting.