Corona is currently determining the global economy. What are the most serious consequences – especially for fair producers?
Matthias Fiedler: In the worst case, some fair trade organizations in the Global South, but also in the North, will not survive the crisis. How many this will affect is not yet foreseeable. But especially with producers and smallholders, in many countries it is a question of livelihood, as there is often a lack of basic security. For the importers here, we know that many had to go to their financial reserves in order to be able to continue to pay wages and salaries or to guarantee the pre-financing of goods. Because this solidarity with trading partners and producers is what distinguishes fair trade actors from conventional companies. In one sentence, the motto is: fair trade companies want to survive the crisis together with their trading partners, not at their expense.
Which industry do you think is most at risk?
Fair trade was hit hardest. A survey of the member organizations of the Forum Fairer Handel has shown that sales losses of ten to 20 percent are expected in this segment for 2020. The worst effects, however, are the artisans in Africa, Asia and Latin America, who are unable to work in their workshops due to curfews, cannot receive any materials or cannot export the finished goods. This is dramatic insofar as handicraft producers are often unable to carry out any other economic activity and rarely own land for self-sufficiency.
They are planning a program to restart the economy after Covid-19. What should that look like?
Fair trade has achieved a lot in 50 years, but the poor forecast for 2020 confirms a fundamental deficit in world trade: companies that show solidarity with their partners and generally put people and the environment above profit are left behind in the existing economic system. For a sustainable global economy, the principle of “people and the environment before profit” must become the norm. These include fair prices, human rights due diligence, grievance mechanisms, long-term supply relationships and the prohibition of unfair trading practices. From the FFH’s point of view, there cannot be a second economic stimulus program that is not based on these principles.
So politicians have a duty?
The drastic effects of the Covid-19 crisis on the people at the beginning of many conventional supply chains show that this fundamental realignment of the economic system is urgently needed. With this in mind, it is now important to forge a strong alliance for the necessary “socio-ecological turnaround” and to put the specific demands for a “fair new start” on the political agenda. Due to the general election in late summer / autumn 2021, we have to move forward quickly. And: In the future, companies will have to take responsibility for producers and workers along their supply chains.
The supply chain law polarizes: what do you fear?
It is currently under discussion that the law would only apply to companies’ first direct delivery stage. This would mean that the majority of human rights violations along international supply chains would not be recorded. In the cocoa sector, for example, where exploitative child labor is unfortunately still the order of the day, the law would then be ineffective. Even without liability for companies that have not met their due diligence obligations, the supply chain law would become a “toothless tiger”. Without consequences in the event of violations, a law is like a voluntary commitment.
How do you imagine the law to be structured?
In order for a supply chain law to work, it must oblige companies to exercise due care along the entire value chain and must not fall short of the requirements of the UN Guiding Principles on Business and Human Rights. In addition, it must also include environmentally-specific due diligence, because environmental degradation often goes hand in hand with human rights violations. A state authority must be empowered to monitor compliance with human rights and environmental protection requirements and to sanction companies in the event of non-compliance. The law must apply to all large companies that do business in Germany (including foreign ones) as well as small and medium-sized companies from risk sectors. And especially important: companies must be held liable for foreseeable and avoidable damage. Those affected by human rights violations abroad must, in turn, have the opportunity to sue irresponsible companies for damages in German courts.
But it’s not that simple with liability?
The point of liability is highly controversial; various misinformation is circulating. Representatives of business associations, in particular, make claims that are not true – for example, that companies are liable for something over which they have no influence. Basically, a law without appropriate sanctions has no effect. So there must be consequences if companies fail to comply with their due diligence obligations under the law. However, the principle of appropriateness must apply here: companies are only liable if they can be shown to have acted negligently or deliberately disregarded their diligence. So if a company can demonstrate that it has taken appropriate measures, depending on its influence, to avoid risks to people and the environment in its supply chain, it has nothing to fear. The aim of a law should not be that as many lawsuits as possible are initiated, but that people and the environment are not harmed in the first place through improved risk management in companies.