Responding to a petition made by Greenpeace and other associations and individuals in July, German Chancellor Angela Merkel has initiated a debate over proposed legislation that would oblige companies with 500 or more employees to comply with human rights standards in their global supply chain. Among other things, slave and child labor would be banned. Environmental degradation would also be taken into account, including illegal logging, pesticide emissions, water and air pollution.
Commenting on the draft bill, which has been the subject of some controversy, the German sporting goods industry association, BSI, called for these issues to be regulated at the European level, as a solo effort by Germany would put German companies at a disadvantage compared with other companies in the European Union and the rest of the world.
In France, some legislation was passed two years ago that regulates the due diligence obligations of large French companies in their supply chain. In the Netherlands, too, a law has been in place since 2019 that obliges companies to prevent child labor in their supply chains.
Advocating the protection of human rights in international economic relations, BSI emphasized in a statement that the sporting goods industry can claim to be a role model in terms of sustainability, social standards and the protection of nature. “In this sense, we also consider it fundamentally right that Germany wants to take on a pioneering role in social responsibility and sustainability in this area,” the association stated, but added that “fair and equal competitive conditions should also be guaranteed and the principle of proportionality should be preserved.”
BSI also noted that non-compliant products from third countries can find their way to consumers in Germany, for example via internet platforms. If a supply chain law were to be passed, it would have to affect all market participants who place products on the market in Germany or Europe, it said.
In order to ensure the necessary planning and legal certainty for companies, BSI considers it essential that the legislator should clearly defines the manufacturing stages covered by the proposed legislation, as well as the scope and the methods of a risk analysis.
While environmental and human rights organizations have long been pressing for companies to have a statutory duty to deal with these issues, some trade associations have seen this as a potential competitive disadvantage for them because of problems with its implementation and, ultimately, a danger that companies will withdraw from risk areas and no longer help to improve local working conditions.