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Tuesday, March 5, 2024

Economic researcher: ‘The supply chain law is the first step’

Mannheim-based economic researcher Laura Marie Edinger-Schons sees the new supply chain law as an important contribution to compliance with human rights. The law in Germany is less consistent than in other countries, such as France. With the regulation passed in the Bundestag on Friday, however, one is at least moving from voluntary self-regulation by companies to a legal obligation. “It’s a first step – and an important one,” said the researcher at the German Press Agency.

The law is intended to help curb child and forced labor as well as environmental degradation during production. “There is still a lot of arguing about the concrete form of the law,” said Edinger-Schons. The law obliges companies to check compliance with human rights at direct suppliers. But these are often middlemen.

“The problem here is that many of the worst human rights violations take place at the beginning of the supply chain, especially when it comes to child labor,” criticized the Mannheim professor from the Chair of Sustainable Management. Companies only have to take action against violations of human rights at the beginning of the supply chain if they have received specific information.
From the researcher’s point of view, the law also neglects ecological aspects, which are often inextricably linked with social ones. According to her, a much stricter and more comprehensive law would be needed in order to have a profound effect. There had been resistance from business associations against the regulation adopted on Friday. The employers’ association BDA complained that the law was “overregulating and superfluous”.

If such a law leads to a high level of bureaucratic effort for companies, that is indicative, according to the Mannheim scientist. Because it shows how much is wrong in the globalized economy and how little transparency there is with regard to certain areas of the supply chains. “At the same time, one could deduce from this that our current lifestyle may only be possible if the most serious human rights violations are committed in other parts of the world,” said the researcher, who deals with aspects of business ethics.

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But there are also many companies that support the law. From Edinger-Schons’ point of view, it also offers business opportunities. Unethical practices and the resulting scandals not only harmed the companies responsible, but the entire economy. With a closer look at human rights, climate protection and sustainability, the label “Made in Germany” could once again have a positive effect, argues the researcher.
The law applies from January 1, 2023, initially for companies with more than 3,000 employees – from 2024 onwards also for companies with more than 1,000. According to statistics, there are around 2,890 companies in Germany with 1,000 or more employees. Smaller medium-sized companies are not affected.

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