Germany and the German economy are reaping the benefits of a world of interconnected economies. In 2018, German companies exported goods worth over 1.3 trillion euros. Sixty percent of these exports contain components that were produced outside Germany or will be processed further abroad and then re‑exported.
International supply chains facilitate the global division of labour and often make products cheaper. However, they can also lead to the exploitation of workers in countries with lower human rights standards or lower wages.
In order to prevent the violation of fundamental human rights in global supply chains and to describe German companies’ human rights due diligence clearly, the German Government adopted the National Action Plan for Business and Human Rights in 2016. What does this Action Plan contain and what are the next steps?
(1) What is the National Action Plan for Business and Human Rights?
The National Action Plan for Business and Human Rights (NAP) specifies for the first time how German companies should meet their responsibility to respect human rights. Approved by the German Cabinet on 21 December 2016, the NAP implements the United Nations’ Guiding Principles on Business and Human Rights, which were unanimously adopted by the Human Rights Council in 2011. The German Government is actively furthering the implementation process and providing support to companies, for example in the form of guidance, training courses or guidelines.
(2) Under the NAP, what exactly is expected of companies?
Not only must companies adhere to their human rights due diligence in their sites in Germany, they should also ensure that human rights are respected along their supply and value chains, that is, by their contractors or partner companies. This applies to fundamental human rights, as laid down in the main UN covenants and conventions and in the International Labour Organization’s core labour standards, which prohibit forced and child labour, protect workers’ rights to peaceful assembly and association, and stipulate adherence to health and environmental regulations.
(3) How should the requirements be implemented and monitored?
The NAP contains five core elements as guidelines on how human rights due diligence is to be effectively included in a company’s management processes. The first step is for companies to publicly express their willingness to respect human rights. They are also called on to identify concrete risks to the respect of human rights and to assess the possible negative impact of their activities on human rights. Should risks be identified, countermeasures are to be taken and made public. Companies are also expected to set up a transparent grievance mechanism.
The German Government has set up a process to monitor the implementation of these core elements. To this end, some 1800 companies will be contacted in writing starting from the end of July 2019 and asked to provide information on whether and how they are meeting their duty to protect human rights standards in their firm. Based on the outcome of this monitoring process, the German Government will decide which further steps to take in the sphere of business and human rights.
(4) What information can companies provide on the status of implementation?
Companies will be rated as “compliers” or “non‑compliers” in the NAP monitoring process, depending on whether or not they have introduced the core elements of human rights due diligence adequately. If a company has not (yet) carried out certain procedures and measures, it can state how it intends to meet the targets by the end of 2020. In early 2021, the German Government will verify whether it has actually put these plans into practice.
The monitoring process thus not only provides information on the current status of implementation and on any shortcomings, but also reveals development potential and motivates firms to respect human rights more proactively, to create transparency and to benefit from others’ experiences.
(5) Why is the first survey voluntary? Why are companies not being legally obliged to respect human rights from the outset?
The idea of the NAP is to give companies the opportunity to meet their human rights obligations voluntarily. It counts on companies being keen to have a good human rights record, for example in the interests of their reputation and further competitive advantages. How human rights responsibility is implemented can vary significantly depending on a company’s size or sector. Small and medium-sized enterprises may have fewer means to monitor their suppliers and clients than large corporations do. As a result, it is both right and important to obtain a reliable picture in the NAP monitoring process of the facts and of what has been achieved so far. However, should the survey reveal that voluntary undertakings are not enough, the German Government will consider further action from 2020 onwards that may culminate in legislative measures.