CSR reports in the European Parliament: producing countries need to assume their responsibility

The European Parliament is presently working on the issue of corporate social responsibility (CSR) in two own-initiative reports on the EU-garment initiative and on global supply chains. In this context, old demands are being dusted off and presented yet again: make companies accountable for the errors of their suppliers and impose due diligence obligations on companies.
Social-Democrat, Green and Left MEPs are currently incorporating these and other requirements in the two reports. It is clear: under no circumstances must such a devastating tragedy as in Bangladesh in 2013 ever be repeated. Failure to respect regulations led to more than 1,000 people losing their lives when the Rana Plaza factory collapsed.

But it is also clear that structural problems in producing countries have to be addressed in order to achieve a sustainable improvement in living standards. These include occupational safety as well as environmental standards. Responsibility for the introduction and enforcement of the necessary statutory provisions lies with the governments of the countries in question. Only in this way can compliance with labour standards and a high quality of supplier relations be ensured in the long term.

The many sectoral initiatives already bear witness to the commitment of companies to support their supplier firms within the limits of their possibilities. Business Social Compliance Initiative (BSCI), TfS, Chemie³ and Bettercoal are examples of such ecological and social activities. However, these efforts can do no more than complement action at State level.

The UN Guiding Principles on Business and Human Rights rightly distinguish between the role of the State and that of companies. The OECD Guidelines for multinational enterprises in the area of corporate responsibility also set out recognised principles. However, under these principles, companies are responsible for their own business conduct but not for the actions of their suppliers and customers. German business therefore supports the European Parliament’s call for further countries to be persuaded to sign the OECD Guidelines such as China, India or Bangladesh.

A further demand of the rapporteurs that companies based in Europe be made accountable for errors of their direct and indirect suppliers could lead to considerable problems. For instance, small and medium-sized enterprises (SMEs), which require special support in their contribution to sustainable development, could be taken to court for situations over which they have no influence. This demand runs counter not only to practice on the ground but also to the OECD Guidelines which state that no liability should arise from a business relationship between two companies which exchange products or services. It is therefore more effective to support committed companies so that efforts abroad can also continue to make a contribution to development policy.

The plenary votes on the report on the EU clothing initiative took place at the end of April. Unfortunately a majority agreed on the demands explained above. Thus, it is important to continue explaining why responsible action by the governments of producing countries is key.

The Trade Committee has yet to hold its first discussion on the report on the consequences of EU trade policy for global supply chains.

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drafted by: Anne Meister (BDA)