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Home Global Economy How lobbyists "collaborated".
Global Economy

How lobbyists "collaborated".

The EU Commission wants to present its draft for a supply chain law on Wednesday. This is intended to oblige companies to ensure that their foreign suppliers comply with human rights and environmental standards. Anyone who violates this should be held liable, as human rights and environmental groups have been demanding for many years.

But lobby groups have been working massively behind the EU scenes against a strict supply chain law. This emerges from internal EU documents that Correctiv and SWR have evaluated. Above all, the lobby groups had one recognizable goal: to weaken the supply chain law. According to research by Correctiv and SWR, the Confederation of German Employers' Associations (BdA) and the CDU-affiliated SME and Economic Union (MIT) have lobbied against the Supply Chain Act.

Lobbyists: Plans are "worrying"

A representative of the Mittelstandsunion wrote an email to employees of the Federal Ministry of Economics on March 11, 2021. It states that the plans for an EU-wide supply chain law are "worrying". Then examples are given of what MIT considers worrisome: "civil liability" (for companies) or "greater consideration of environmental aspects". In addition, German companies should not be obliged to prepare detailed reports on the supplier countries, because that would "put a massive burden on German companies".

The project will be rejected by the Federal Ministry of Economics "as well as by the CDU/CSU parliamentary group". And then the representative of the Mittelstandsunion made it clear: Since the law "can no longer be stopped, we must make every effort to prevent worse things from happening".

Employers' organizations put pressure on

Employers also become active afterwards. On April 30, 2021, the Justice Department of the European Commission received an e-mail from the Confederation of German Employers' Associations (BDA) with the subject line: "Global supply chains: expectations of German industry with regard to possible legislative measures". In the appendix, the association sends a so-called non-paper, i.e. an informal, internal paper that is not intended for publication. The demands are clear: the German economy has "practical expectations" of Europe-wide regulation: the implementation must be "feasible" and "appropriate" and offer "legal security".

Neither the Mittelstandsunion nor the BDA commented on this when asked. Correctiv and SWR have a leaked current version of the Commission's draft, which contains comparatively extensive regulations. However, some critical points, especially with regard to the liability and due diligence of the board of directors, are rather soft and vague. On these points, the text lags behind a proposal by the EU Parliament from March last year.

Still arguing about details

It is not yet clear whether the draft will be presented in exactly the same way tomorrow. The commission said on Tuesday that individual details were still being debated.

"The idea of setting up guard rails for business interests has probably been reduced quite a bit," says MEP Bernd Lange (SPD) with regard to the binding duties of care and liability regulations. "The associations shoot absolutely against it. They see regulation as an attack on free enterprise, and that has led to considerable discussions."

regulations have been weakened

A supply chain law came into force in Germany last year. This has already been criticized as toothless and incomplete by human rights and environmental activists. Business associations had also had a vehement influence in the run-up to this. Now there are indications that the same thing is repeating itself at the European level.

In March 2021, the European Parliament passed an ambitious proposal for a new directive. Accordingly, far-reaching due diligence obligations should apply to companies with 250 or more employees, which encompass the entire supply chain. In the event of violations, fines and liability under private law were provided for. According to the leaked draft, only companies with more than 500 employees should be affected. EU-wide this would be around 12,000.

It is precisely these specifications regarding the number of employees that have been massively attacked by the business lobby in recent months. The BDA writes in its non-paper: "The scope of any possible supply chain regulation should be limited." Companies with fewer than 5,000 employees "should be excluded from any regulatory measures". The BdA also rejects liability under civil law, as well as duties of care that go beyond the first link in the supply chain – i.e. the direct supplier. Put simply, instead of controlling the entire supply chain in terms of environmental and human rights, you should only look at the first link.

Misereor: Settlement is softened

In a recent report, the organization Misereor shows how the business lobby has exerted influence on politics in order to undermine the supply chain law. "The German supply chain law was a good start," says Armin Paasch, human rights expert at Misereor, "but in some important aspects it is too weak for us, which is why we say: The EU supply chain law must improve these points."

However, Paasch fears that exactly the opposite will happen: "The risk is that the central elements will be softened. And that includes the civil law liability rule, environmental standards and climate protection, the recording of the entire value chain. Then the supply chain law would not only have no added value, but would be counterproductive. It would weaken national laws again."

Draft has been postponed several times

The publication of the draft, however, was postponed several times: in May and December the "Committee for Regulatory Scrutiny" raised concerns and thus obtained a postponement. The Committee is a body of the Commission tasked with reviewing draft legislation. The fact that this body rejects a draft twice in a row is extremely unusual, says MEP Tiemo Wölken (SPD).

Wölken assumes that the work of the lobby organizations and associations will intensify again in the coming weeks. The next step is for the EU Parliament to negotiate with the Council on the exact regulations. Wölken fears: "We will have to reckon with significantly more resistance in the negotiations."

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