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Global Economy

Fair conditions from the start

It's about millions of people working under inhumane conditions around the world. It's about child labour, wages far below the subsistence level, life-threatening safety standards in factories or the handling of toxic substances that make workers ill for life. And it's about environmental protection. This is how international trade unions, aid organizations and Christian churches see it.

The European Center for Human Rights, for example, is observing a growing trend towards inhuman working conditions worldwide. Amnesty International sees this as a growing problem, especially in China.

hold companies accountable

The European Union wants to do something about this. With a supply chain law that the Brussels EU Commission wants to propose today, companies should be held accountable. They should not only ensure decent jobs and compliance with environmental standards themselves, but also ensure that their suppliers do the same. The aim is that preliminary products – regardless of whether they are screws, materials or semiconductors – are manufactured in compliance with fundamental human rights and environmental standards.

"In fact, the majority of human rights violations and environmental damage by companies can be traced back to their suppliers," said EU Justice Commissioner Didier Reynders. So actually on companies over which they have no influence. But that should change.

By law, the EU Commission wants to impose higher due diligence obligations on companies. They should check where the goods they supply come from, how they were manufactured, and what consequences this has for the climate and the environment. So it's not just about subsidiaries, but about everyone involved in a manufacturing process.

At least 17,000 companies affected

According to the Commission, around 17,000 companies with more than 500 employees will be directly affected by a new Europe-wide supply chain law. Where there is a greater risk of human rights and environmental protection violations, the number of 250 employees is the limit – this is the case, for example, when it comes to mining mineral resources or textile production.

In some EU countries there are already national laws that regulate this, including in Germany. The European Parliamentarian Anna Cavazzini still sees an improvement in the European advance. "The commission's draft goes much further than the German law," she says. "For example, a liability clause should be included so that victims have easier access to courts – and that's a good thing, because to really have an effect we need a supply chain law without loopholes."

For others that goes too far. They fear an enormous control and bureaucracy effort for the companies. "Pointless bureaucracy must be avoided, because extensive tracking of value chains does not make sense," says CDU MEP Axel Voss. "Therefore, a risk-based approach must be taken here. So only where there are actual risks in the supply chain."

Expect intense parliamentary debates

There should therefore be an intensive debate in the European Parliament when the Commission's proposal is officially there. Greens and Social Democrats in particular had pushed for a legislative initiative by the Commission. For the SPD MEP Timo Wölken, the proposal goes in the right direction. "It's good that the companies recorded have to be responsible for climate issues, human rights and environmental law. There is also room for improvement here, but that wasn't necessarily to be expected," he says.

However, it is to be expected that there will be significant resistance from parts of the economy in the EU. There are fears of competitive disadvantages due to too much regulation. For the EU Commission, however, it is important to use this step to underpin its claim that it is serious about environmental protection and human rights.

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