Every year on April 24th, millions of people from all over the world come together on social networks to commemorate the victims of a disaster that happened on that very day in 2013. Internet users show themselves on photos or videos in which they are wearing their clothes inside out and holding the labels in front of the camera. You are part of a movement whose central question is: “Who made my clothes?” – who made my clothes?
More than 1,100 workers died on April 24, 2013 in the collapse of the Rana Plaza textile factory in Bangladesh, and almost 2,500 were injured; More than 31 fashion labels, including those from Germany, had cheap clothes made there for export. Shortly after the accident, the global protest movement “Fashion Revolution” emerged, which has since drawn attention to the miserable working conditions along the supply chains of the textile industry and fights for more transparency.
Cotton harvest in Brazil. Working conditions and environmental standards are often poor, especially at the beginning of the supply chain.
(Photo: Sebastiao Moreira / dpa)
It took a full eight years for the Bundestag to agree on a law that would prevent such catastrophes in the future and curb the exploitation of people and nature in the global production of goods. If you start the calculation with the devastating fire in the Ali Enterprises textile factory in Pakistan, in which almost 260 people died, it is even nine years.
The Supply Chain Act passed on June 11th now obliges companies with their headquarters or branches in Germany to ensure compliance with minimum social and ecological standards by their foreign suppliers. “Anyone who buys a T-shirt made in Germany must be sure that no workers were exploited for it and that no children had to work,” demanded Development Minister Gerd Müller (CSU), who promoted the law together with Labor Minister Hubertus Heil (SPD) Has. There shouldn’t be a second Rana Plaza.
The supply chain law will also be the topic of Frankfurt Fashion Week
From 2023 onwards, companies with at least 3,000 employees should initially have an eye on their entire supply chain, but be responsible for them on a tiered basis; from 2024 the limit will drop to 1,000 employees. While the due diligence obligations apply to their own business area and direct suppliers in full, companies only have to take action with indirect suppliers if they become aware of violations. In this case, you are requested to check and remedy this immediately. If they do not, they face fines of up to two percent of the annual turnover; in the event of serious violations of the law, they can be excluded from public contracts for up to three years. The Federal Office of Economics and Export Control (BAFA) is to monitor whether the companies actually comply with their duties of care. In addition, trade unions and non-governmental organizations can sue in German courts on behalf of foreign victims in the event of human rights violations and damage caused by environmental degradation.
A factory worker in Bangkok, Thailand. The supply chain law is intended to lead to more protection of people and the environment in the global economy.
(Photo: Athit Perawongmetha / Reuters)
The supply chain law will also be a topic of discussion at the premiere of Frankfurt Fashion Week, which will take place digitally from July 5th to 9th. The fashion week has big plans: “To make the fashion industry more sustainable on an international level”, as it says in a press release. It wants to offer a platform for this in cooperation with the United Nations (UN). At the “Frankfurt Fashion SDG Summit”, representatives of the industry, the United Nations, politics, science and public life will come together once a year “to further raise awareness of the sustainable development goals”, says Detlef Braun, Managing Director of Messe Frankfurt, who, together with Anita Tillmann, Managing Director of the Premium Group, is the initiator of the Frankfurt Fashion Week. As the fourth largest industry in the world, the fashion and textile industry is one of the most influential when it comes to achieving the UN’s 17 development goals for sustainability. “It is our aim that the Frankfurt Fashion Week play an active role in supporting the goals of international politics,” said Braun. 2023 will also be the key year for fashion week – by then, all exhibitors at the Premium, Seek and Neonyt fashion fairs must commit to the 17 sustainability goals.
While the Frankfurt Fashion Week sees itself only as a neutral platform for discussions about the supply chain law, its Neonyt fair for sustainable fashion explicitly supports the new regulations, says Thimo Schwenzfeier, Show Director of Neonyt. “Nevertheless, from our point of view, the law has been weakened too much in some crucial places.” Non-governmental organizations and environmental protection associations complain that the civil law liability rule originally planned by Müller and Heil, according to which companies are liable for the damage they have caused by disregarding their duties of care – it was deleted under massive pressure from some business associations. “Victims continue to have virtually no chance if they want to bring German companies to justice for human rights violations in German civil courts,” complains Johanna Kusch, coordinator of the civil society alliance “Supply Chain Initiative”.
The risks increase with the number of suppliers
Another problem is that companies only have to carry out risk analyzes if they have “substantiated knowledge” of human rights violations. But especially at the beginning of global supply chains, there are catastrophic working conditions; this is where most of the environmental risks and human rights violations occur. Therefore, the law in its current form falls short. “It is imperative that improvements are made here so that something actually changes in the global south,” demands Dieter Overath, CEO of Fairtrade Germany.
An item of clothing often goes through many stations before it hangs in the store for sale.
(Photo: Daniel Reinhardt / picture alliance / dpa)
It is impossible to say exactly how great the risks of such sustainable factors are for medium-sized companies, explains Martin Faust from the Frankfurt School of Finance & Management. However, the past has shown that there are far-reaching risks to reputation. After all, the risks also depend on the number of direct and indirect suppliers and their locations. “In Europe and the USA, they are generally likely to be lower than in Asia, South America and Africa,” says Faust. According to Faust, with a good risk assessment there should be no financial damage. However, in the future, companies will have to spend more time and money on selecting, drafting contracts and evaluating suppliers, says Faust.
Business associations speak of a bureaucracy monster
Business associations have protested against the supply chain law from the start. Uwe Mazura, General Manager of the General Association of the German Textile and Fashion Industry, speaks of a “bureaucratic monster”. A simple men’s shirt goes through 140 stations “from the cotton field to the hanger”; a medium-sized company that sells shirts in Germany can hardly control all stages of the supply chain. Furthermore, the law weakens the competitiveness of medium-sized industries, fears Mazura. “Employers should be given duties that many European and international competitors do not have.” Resistance is also rising because of the additional costs that the new regulation will cause. The Federal Ministry for Economic Cooperation and Development (BMWi) weighs against it. On the one hand, the Supply Chain Act rather ensures a level playing field among German companies. On the other hand, the control of the entire supply chain is quite feasible; some exemplary companies have long shown how it works. And as far as the additional financial burden is concerned: According to a study commissioned by the EU Commission, these should remain manageable. For large companies, the costs should averaging 0.005 percent of their profits, for small and medium-sized companies 0.07 percent.
Participants from aid and environmental protection organizations demonstrated in front of the Federal Chancellery for a supply chain law in September 2020.
(Photo: Kay Nietfeld / picture alliance / dpa)
The German supply chain law has not yet reached its goal. The next step must be a regulation at the level of the European Union (EU), according to the BMWi. “The German supply chain law can be a blueprint for regulation at EU level,” said a spokesman. There is great hope among proponents for a significantly stricter supply chain law. In March of this year, a large majority in the EU Parliament voted for far-reaching due diligence requirements within the entire supply chain, which should apply to all European companies, regardless of their size. MEPs also called for companies to be sued for damages for human rights and environmental violations. The EU Commission actually wanted to present its draft law in mid-June. However, the decision on the text has now been postponed until September; the submission required more time to think about it. Again there is great pressure from the business lobby.