Germany’s Federal Government has said that it intends to enforce rules that require European companies to meet certain minimum standards of due diligence to stamp out human rights breaches and environmentally destructive practices such as deforestation in their supply chains.
Germany hopes to address the topic during the German EU Council Presidency, while legal regulations will be drawn up at a national level.
The proposal has attracted broad-based backing from campaigners for environmental and social justice and businesses alike.
In a joint statement, the Global Nature Fund (GNF) and the Lake Constance Foundation (Bodensee-Stiftung) expressed their support for the move, noting that ensuring socio-ecological standards along the supply chain was one of the most significant challenges facing CSR management today.
In particular, GNF noted that it is difficult for businesses to control what happens ‘outside the European factory gates’ in overseas commodity supply chains. The environmental group said this was, in particular, a reflection of the complex nature of supply chains, where raw materials can pass through several traders and traceability is ‘difficult’.
International trade fuelling socio-ecological issues
The result of these opaque supply chains can be social and ecological burdens that are felt in producer countries.
GNF said it is ‘particularly concerned’ about the impact that these international supply chains have on biodiversity.
“Studies show that there is a significant loss of biological diversity in countries where raw materials and goods for international trade and thus export to Europe are obtained and produced, but not be consumed,” GNF suggested.
Marion Hammerl, Managing Director of the Lake Constance Foundation, elaborated: “Scientists were able to show that 30% of all endangered species got on the red list through international trade. The deforestation for soy cultivation, the use of pesticides on banana plantations or the poisoning of rivers through ore mining all contribute to the loss of biological diversity, especially in countries in the Global South."
Hammerl's conclusion is clear: "We need a supply chain law. At the German level as well as at the European level. And preferably yesterday."
Regulate for a ‘level playing field’
Many companies are already working to eliminate deforestation and human rights abuses in their supply chains.
The Initiative for Sustainable Agricultural Supply Chains (INA), which includes 33 companies and organizations, also voiced its support for the proposed Supply Chain Act.
Representing the like of Nestle and Symrise as well as NGOs like WWF, Rainforest Alliance and Fairtrade, the INA said industry and civil society are ready to ‘take responsibility’ together with the Federal Government to make supply chains from country-of-origin to German and European supermarkets ‘sustainable and tradeable’.
"We promise the Federal Government our support for a national supply chain law and ambitious European regulation,” the joint statement said.
The signatories said that many of them have ‘already taken steps’ to meet their global supply chain responsibilities to make them more ‘transparent and sustainable’. But they added a legal regulation would make a significant contribution to legal security and a level playing field.
“As a global company, climate protection and sustainable supply chains are especially important for us,” Bernhard Kott, Chief Sustainability Officer at Symrise commented.
“To achieve this, we rely on transparency and traceability to achieve full control along the value chain. Our suppliers must adhere to our Code of Conduct, which in addition to full details on the source of raw materials includes factors like human rights, health and environment.”
“We are convinced that the protection of biodiversity, sustainable supply chains and the goal of being climate-positive by 2030 will make a lasting contribution to our business success.”
Stefan Hörmann, Deputy GNF Managing Director and Head of Business and Biodiversity, welcomed the support from industry and said that a legal framework would help raise all boats.
"Many companies are already showing how it's done and are setting a good example for social and ecological responsibility. But not everyone - and people, nature and biodiversity suffer from our unscrupulous trade and consumption. That is why it is important to create binding regulations. We at the GNF are committed to fair trade as expressed in a supply chain law,” Hörmann said.
Calls for regulation mounting in Europe
Pressure has been mounting in Europe for regulators and industry to step in and prevent the import commodities like beef, palm oil and soy that are associated with deforestation and habitat loss in the Amazon and other tropical forests.
Last week, a row erupted between environmental campaigners at Greenpeace, UK retailer Tesco and international beef giant JBS over accusations of links to deforestation in the beef and animal feed supply chain.
Responding to pressure, Tesco said it will reach its 2025 zero deforestation target (a claim challenged by Greenpeace) and called for the introduction of legislation to address the issue.
“We stand ready to play our part, and today we call for our government to mandate food companies, as part of its National Food Strategy, to introduce effective due diligence across supply chains to make sure all food sold in the UK is deforestation-free,” the company said.
The free-trade deal between the EU and Mercosur countries is also facing mounting opposition as soy and beef exports from Brazil are linked to deforestation in the Amazon.
The EC has argued that the deal makes adequate provision for environmental and food safety protections. But political opposition is gathering momentum.
French President Emmanuel Macron has also spoken out about his concerns, having faced domestic political pressure from the Greens after a poor electoral performance. At the end of June Macron declared France will not make 'any trade agreement with countries that do not respect the Paris Agreement'. The French President also called for the creation of the crime of ecocide, which he said should be judged by the International Criminal Court.
The Dutch parliament, as well as Austria, Belgium, Ireland and Luxembourg have all now voiced opposition to the deal on the basis that it will bring ‘unfair competition’ to European farmers and accelerate deforestation in the Amazon.