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You’re strolling down the aisles of your supermarket, and every item you see is responsibly sourced from A to Z.
You can rest assured that your Argentine steak didn’t cause deforestation, or that your zucchini were picked by farmworkers who are treated fairly.
This is Brussels’ plan, at least in theory. The European Commission is set to unveil draft legislation in June to compel all EU-based companies to take responsibility for human rights and environmental abuses throughout their supply chains — the so-called due diligence regulations. The European Parliament in a report in March said this is needed urgently because EU-based companies haven’t been active enough in preventing supply-chain abuses — only 37 percent of EU businesses conduct the proper due diligence, according to a Commission study.
But is Brussels’ idea too good to be true? Grab a cart as POLITICO takes you on a futuristic shopping spree.
Our first stop is the candy aisle, where chocolate is now a guilty pleasure only for the calories — not for concerns about child labor on cocoa plantations.
The EU wants the new regulations to finally tackle the problem of underaged workers in the global cocoa business. Child labor is still rife on cocoa farms across Ivory Coast and Ghana, where 60 percent of the world’s chocolate comes from. A major report by the University of Chicago for the U.S. government last year found that over 1.5 million kids work in cocoa production in the two west African countries.
Decades of voluntary commitments have failed to change the situation, so the new mandatory EU rules, in theory, could encourage the handful of giant companies dominating the world cocoa industry to do more to check that their supply chains are not relying on children. The European Parliament is even pushing for an import ban on products made using child labor, under the incoming law.
But whether your chocolate truly will be guilt-free or not hinges on how far down the supply chain the law forces companies to look. Sergi Corbalán, executive director of the Fair Trade Advocacy Office, said the law might force businesses to comply on paper, “without actually forcing companies to change the way they buy and how much they pay for the products — and that’s the risk.” For instance, companies could pay for private audits to prove that they are assessing their supply chains. Such a self-policing bureaucratic approach would allow them to sidestep more profound regulatory or legal measures targeting child labor in cocoa farms.
Some business groups are also pushing for companies only to be responsible for their own direct suppliers, and nothing further. EU Justice Commissioner Didier Reynders has said that due diligence will have to apply throughout all tiers of the supply chain. “The most flagrant violations of human rights don’t happen in the first tier of value chains, but further down,” he said in March.
2. A mobile phone
You need — well, really want — a new mobile phone, and you feel confident that now, any new phone you buy in the EU will be manufactured without the abuse of child miners for components like cobalt. The new law has made it easier for any plaintiff around the world to bring a lawsuit to a court within the bloc against an EU-based company involved in the alleged harm.
Human rights activists hope that the due diligence law will make it easier to hold EU-based companies liable for harm caused down in the supply chain, just like in a U.S. class action lawsuit where former child miners for cobalt in the Democratic Republic of Congo are suing major tech companies like Google, Apple and Tesla.
But the reality for now is that plaintiffs from outside the EU face a complex patchwork of jurisdictions, bureaucracy and costs. If former child miners from Congo were to bring their case to the Netherlands against a Dutch company, the Dutch courts would probably hear the case under Congolese law. Using the law of where the abuse happened could limit how the judgment is enforced, according to Richard Gardiner from NGO Global Witness.
But if the plaintiffs were working for a Congo-based mining company that is a subsidiary of a Dutch-headquartered business, then the same court may not have the power to judge the case. And there’s a similar loophole for a multinational company selling phones in the EU that doesn’t happen to be headquartered in the bloc.
“In order for this law to have any bite and to deter companies from carrying out and contributing to abuse, you need to have a predictable and accessible means for victims to seek justice,” Gardiner said.
Unsurprisingly, businesses and more conservative political voices prefer to maintain the status quo over jurisdictions, which they argue already grants sufficient access.
They also fear that easier rules to sue EU-based companies could lead to a deluge of claims. “What we cannot support is to allow for a wave of claims against undertakings from outside the EU for harm that they might in any way be linked to,” said MEP Axel Voss from the European People’s Party.
3. Italian olives
Carting down the condiments aisle, you reach for a jar of green olives from Italy and sigh with relief, glad you can trust that these olives weren’t picked by what amounts to slave labor in the form of undocumented immigrants being exploited as farm hands for as a little as €2 to €2.50 per hour.
With the new law in place, the supermarket sourcing olives can either pressure the farm into conforming with labor rights or move on to another supplier.
“[Due diligence] is an opportunity to tackle the abuse of migrant workers on farms in Europe, [but] there is a risk that interest groups will carve out an exception for EU supply chains,” Marc-Olivier Herman of Oxfam cautioned.
If the European Parliament’s report is anything to go by, companies that source from supply chains inside the Union may just be asked to carry out a risk analysis, and if no risks are found, they can issue a no-risk statement.
Others worry that EU companies will be forced to police each other if part of their supply chain involves other businesses within the bloc. If all companies need to analyze upstream and downstream risks in their supply chains, this could lead to duplication and what some see as wasted time and money.
“If your direct supplier operates in the EU for example, you will most likely not find a risk of human rights violations, and so checking each other is a waste of time and resources,” Voss said.
And even if supermarkets had the duty to verify working conditions on European farms, then another question is whether the consequences of these checks would improve the living and working conditions of undocumented immigrants, who most often don’t want any run-ins with the law lest they be detained and kicked out of Europe, so possibly fall prey to mafia groups.
It’d be relatively easy for a supermarket chain to conduct an audit where an inspector goes to a farm — either announced or spontaneously — and the undocumented workers hide. The audit gives the farm a green light, and voilà, the supermarket cleared its due diligence.
4. Shower gel
You pluck a bottle of shower gel from the shelf, feeling optimistic about the palm oil in the soap’s ingredients not contributing to deforestation halfway around the globe.
This will be thanks to a new law separate from, yet similar to, due diligence to prevent the import of products driving deforestation abroad. The Commission assures that the pair of laws are coordinated and complementary.
With this anti-deforestation rule, EU authorities will scrutinize more closely “the proof that … the commodities and products [that companies] place on the market have not been connected to deforestation,” according to one EU official.
The Commission is working on a list of commodities — think palm oil, soy, coffee, cocoa — that are linked to deforestation and could fall under its initiative, said Jorge Rodríguez Romero of the European Commission’s environment department.
To ensure that your shower gel isn’t indirectly wrecking forests, the real questions remain how businesses will have to prove that the palm oil they buy is deforestation-free and how strictly EU countries will enforce it. In Indonesia, for instance, transparency campaigners have identified systemic corruption where local authorities issue illegal forest permits to companies, despite a sustainable timber deal in place with the EU since 2016. So although a company may be importing deforestation-free palm oil on paper, EU authorities have precious few means to verify if this is true on the ground.
Where’s the ketchup? You throw a bottle into your cart — it’s now a guilt-free pleasure because you’re sure that the tomatoes weren’t picked or processed by detained Uyghurs in China’s Xinjiang region.
Beyond due diligence, the EU is considering an outright import ban for goods that could be made with forced labor stemming from Xinjiang, where somewhere between hundreds of thousands to more than 1 million Muslims are reportedly detained in work camps.
An import ban is the nuclear option for trade, where the state deems that the private sector’s due diligence can’t stop the abuse. The U.S. chose to ban all Xinjiang tomato and cotton imports in January of this year, so the EU would essentially be following in Washington’s footsteps.
A ban wouldn’t stop the forced labor outright, as those same slave laborers could still pick and process tomatoes for other markets that disregard human rights. Although it could place indirect pressure on Xinjiang tomatoes, they could also find their way into European ketchups in a more roundabout way. For instance, tomatoes could be shipped to a ban-free location — think another Chinese province or foreign countries — before being relabeled, perhaps even processed, and shipped to the EU.
6. Cashew nuts from a market stall
At an open-air market, you buy a bag of cashew nuts to munch on. You hope they haven’t been grown using potent pesticides that damage the nervous systems of workers and their children and leach into the soil and water, wreaking havoc on the environment. But how can you be sure that this small independent market vendor knows the history of these cashews?
Although the ideal is for all products sold by EU-based companies to meet the same standards under the due diligence law, the bloc will carve out special provisions — or perhaps even exemptions — for small companies.
The European Parliament’s SME Alliance didn’t manage to pass an amendment to completely exempt SMEs from due diligence obligations in March, but the Commission heard the message to tailor its expectations to the realities of small businesses.
“Of course, there will be some specific rules for SMEs … we will neither stop at 3,000 nor 2,000 employees, nor will we stop at the first level of the supply chain,” said Paul Nemitz, who leads the due diligence work at the Commission.
Even if a market stall owner had to complete some form of risk assessment, the general idea is for obligations to be adapted to that company’s means. And in any case, it seems unlikely that a regulator would dare crack down on the smallest of companies.
So if your cashew nut importer is just a market stall, chances are they’ll go more or less unchecked. But if the market vendor buys from a large EU-based supplier, the wholesaler could be held more accountable for their supply chains.
Louise Guillot and Arthur Neslen contributed reporting.
Illustrations via Flaticon.
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