Germany Eyes Legislation Making Companies Liable for Suppliers

(Bloomberg) -- German companies are failing to meet the government’s ecological and social standards for their foreign supply chains, raising the prospect that Angela Merkel’s administration will now introduce legislation to force them.

A survey carried out by the foreign ministry found that only a minority of the companies based in Germany with more than 500 employees had met the requirements laid out in the government’s 2016 National Action Plan for Business and Human Rights. Only 20% of the 2,250 companies asked to participate in the survey actually answered, DPA news agency reported on Tuesday.

The study shows “very clearly that many companies have fallen short of the government‘s expectation,” Foreign Minister Heiko Maas said in a statement. “We must therefore now talk about legal regulations, so that exemplary actions by companies will be rewarded and the black sheep will be held accountable.”

The intention of making companies responsible for human rights globally forms part of the coalition agreement between Merkel’s Christian Democratic-led bloc and the Social Democrats. Yet, while the labor ministry and the development ministry threatened they would legally enforce the standards if companies didn’t comply, Economy Minister Peter Altmaier of the CDU warned this would further burden an economy already suffering severely from the effects of the coronavirus pandemic.

In a statement on Tuesday Altmaier called for a European solution to tackle the problem and to avoid a collection of national regulations that would lead to a distortion of competition within the EU.

Steffen Kampeter, head of the national employers’ association BDA, said that German companies were exemplary in observing human and social rights abroad. “A lot has happened in the past 10, 15 years, and German companies are leading here,” Kampeter said on Deutschlandfunk radio.

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