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Corporate Social Responsibility: A closer look at the political agenda on Global Supply Chains

Corporate Social Responsibility is again high on the political agenda: Since December 6, all EU member states are obliged to have implemented the EU Directive on Non-Financial Reporting (2014/95/EU), which mandates businesses to incorporate social and environmental aspects in their yearly reports. Looking at the German G20 agenda for 2017, you will see social and environmental standards in Global Supply Chains high on the list. The draft-law, prepared by the Federal Ministry of Justice and Consumer Protection, has passed most of the legislative process and will return to the Bundestag in the next few weeks to be written into law. The law generally sticks very close to the EU Directive, in most parts being a 1:1 adaptation. While the industry is happy, having lobbied for its limited scope, NGOs and opposition parties are somewhat critical, but consider it a step in the right direction. Two aspects of the law were especially controversial: How many and which kind of companies would actually be targeted by the law – corporations that are listed on stock-exchange, insurers and financial institutions that have more than 500 employees – and in how far would those companies have to report on what happens along their supply chain. As it stands, German businesses will now have to monitor and report on social and environmental risks which occur in processes that are not within their immediate reach. However, most of the German “Mittelstand”, export-oriented SMEs, will not be affected.

0 comments on “dicomm consulting WetterOnline.de on reform of Law on the German Weather Service”

dicomm consulting WetterOnline.de on reform of Law on the German Weather Service

dicomm advisors has been mandated to advise German meteorological services provider WetterOnline on the planned reform of the Law on the German Weather Service (Deutscher Wetterdienst, DWD).

WetterOnline.de is Germany’s biggest internet portal for weather information. More than 6 million unique users us the website monthly, which makes it one of the Top 10 most visited websites in Germany. The company was founded in 1996 and until today has seen continuous growth, currently employing more than 70 employees in its Bonn-based headquarter.

0 comments on “Corporate Social Responsibility: A closer look at the political agenda on Global Supply Chains”

Corporate Social Responsibility: A closer look at the political agenda on Global Supply Chains

Corporate Social Responsibility is again high on the political agenda: Since December 6, all EU member states are obliged to have implemented the EU Directive on Non-Financial Reporting (2014/95/EU), which mandates businesses to incorporate social and environmental aspects in their yearly reports. Looking at the German G20 agenda for 2017, you will see social and environmental standards in Global Supply Chains high on the list. The draft-law, prepared by the Federal Ministry of Justice and Consumer Protection, has passed most of the legislative process and will return to the Bundestag in the next few weeks to be written into law. The law generally sticks very close to the EU Directive, in most parts being a 1:1 adaptation. While the industry is happy, having lobbied for its limited scope, NGOs and opposition parties are somewhat critical, but consider it a step in the right direction. Two aspects of the law were especially controversial: How many and which kind of companies would actually be targeted by the law – corporations that are listed on stock-exchange, insurers and financial institutions that have more than 500 employees – and in how far would those companies have to report on what happens along their supply chain. As it stands, German businesses will now have to monitor and report on social and environmental risks which occur in processes that are not within their immediate reach. However, most of the German “Mittelstand”, export-oriented SMEs, will not be affected.

While Global Supply Chains (GSCs) are by no means a “new” thing, public and political attention has changed over the past few years. Long a hall-mark of business studies, politics and other academia have dealt with GSCs from a development perspective, looking to generate economic opportunity in both developed and developing countries. Now, social and environmental conditions are under scrutiny, and companies from developed nations are often made responsible for it. What effect does this have for political consultancy?

The significance of Global Supply Chains

Global supply chains (GSCs) are by now the most common ways of organizing investment, production and trade in the global economy. The term refers to the cross-border organization of the activities required to produce goods or services and bring them to consumers through inputs and various phases of development, production and delivery. In every country that is integrated into the world economy, they create employment and opportunities for economic and social development. In Germany, almost half of all businesses have some ties to foreign companies and make use of GSCs. In some industries, such as machinery or chemicals, two out of three businesses have gone global1.

The rise of global supply chains over the past decades has produced a new nexus of trade, finance and know-how, becoming increasingly influential in determining future trade and investment patterns, as well as growth opportunities. There is consensus now that policy needs to respond to this reality and promote an environment that fosters participation in GSCs, and also facilitates upgrading opportunities over time. Virtually all major international organizations and global policy forums such as the World Bank, OECD, WTO, G7 and G20 now engage in efforts organize and regulate GSCs.

International Policy Response to GSCs

The policy-relevance of GSCs has become evident in recent G7 and G20 meetings, and is one major element of Germany’s agenda for their 2017 presidency. To quote:

“Sustainable global supply chains can help to further global economic and social development. The inclusion of internationally active companies and adherence to fundamental labour, social and environmental standards play an important role in this respect. The G20 will address this topic intensively for the first time next year.“2

Angela Merkel reiterated that “what we did in G7 2015 will be continued at G20 in 2017”. And 2015 saw some significant action on supply chains, when the G7 passed an “Action for Fair Production” which focused on the social challenges in global production, acknowledging the responsibility of industrialized states and its multinational companies for grievances along the whole supply chain. The German government followed the declaration up with a conference (co-hosted by the BMZ and the Consumer Goods Forum) on the topic earlier this year. In 2017, the Ministry for Economic Affairs and Energy (BMWi) has joined the BMZ and Ministry of Labour and Social Affairs (BMAS) to advance this cause and cooperate with colleagues from the other G20 countries. The G20 venue, which includes large producing countries of GSCs like China and India, could prove to be more effective than the smaller G7, which only includes consuming countries.

While Germany certainly is a champion of pushing sustainability in GSCs, the G20 has not been inactive thus far. G20 action on GSCs started back in 2013, when the G20 leaders noted the “importance of better understanding the rapid expansion of global value chains and impacts of participation […] for growth”, asking the OECD for extensive policy research on the matter.

This year, the Chinese presidency has worked on a broad agenda to improve conditions for global business and trade. The Huangzhou summit championed structural reform, innovation-driven growth, inclusive and interconnected development, and robust international trade and investment. The summit also delivered the G20 Blueprint on Innovative Growth, which highlights the structural reform agenda and innovation-driven growth as fundamental components in achieving strong, sustainable and balanced growth, especially in the digital economy and Industry 4.0. Coupled with the G20 Action Plan on the 2030 Agenda for Sustainable Development, the Chinese presidency gave a huge impulse towards a more sustainable organization of Global Supply Chains.

The G20 heavily relies on expertise by the OECD, and also the IMF and World Bank. Cooperation with the OECD, also evident in tax policy, is very likely to intensify, as the OECD has decades-long experience in dealing with GSCs. The OECD, especially through its Development Assistance Committee (DAC), has produced extensive knowledge on global agricultural supply chains, as well as more recently extractive resources and mining. Apart from the OECD Guidelines for Multinational Enterprises, it has published documents on “Responsible Agricultural Supply Chains” (2016) and a “Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas” (2016, 3rd edition), as well as a “Due Diligence Guidance for Meaningful Stakeholder Engagement in the Extractives Sector” (2016). Those documents, along with similar papers from the UN, are set to be blueprints for CSR reporting and action in the next years.

The changing look on GSCs

Problems in social and environmental sustainability that prevail in developing countries have long been neglected due to their perceived distance to the consumer. However, as chains have integrated vertically with less and less intermediaries, those problems have come to the attention of the consumer and media in the developed states.

Public attention towards GSCs is not so much focused on the upsides of GSC participation, but rather on the social and environmental risks. Those concerns are embedded in wider fears about job losses and foreign competition, and the belief that local production would be preferable. Hence, there is broad demand for improved Corporate Social Responsibility strategies. The EU moved forward with their Directive on Non-Financial Reporting, which is about to be implemented in Germany (see above).

While a significant part of the policy production does indeed occur in international arenas, the importance of domestic policy-making must not be underestimated: labour market policies, social policies and competition policies as well as policies for investment in education, technology and infrastructure are critical to improve GSCs.

The situation in Germany

GSCs are especially important in Germany, which is heavily reliant on manufacturing and export, mostly performed by the SMEs (the so-called Mittelstand). German politics, especially the CDU/CSU faction, is extremely sensible policies affecting this sector, and most are doomed to fail if they are hurting SMEs. For that reason, the CSR-law sticks close to the EU-directive in that it only applies to companies with 500 or more employees. While the Greens and NGOs had pushed for a threshold of 250, business associations had lobbied to keep that number at 500. In effect, only around 300 companies fall under the CSR-law. The same goes for the G20 efforts: the BDI, which heads the Business 20 (B20) in 2017, will lead efforts to limit the effects of the sustainability agenda on German exporter’s competitiveness.

Independently of federal policy-making, German businesses have turned their attention to GSCs, particularly in terms of risk-management. In a recent conference by the Association Supply Chain Management, Procurement and Logistics (BME), one focus was on mitigation of supply chain risks, both on the macro level (i.e. financial shocks, environmental hazards) and micro level (i.e. local conflicts on site or between members of the chain). The arguments presented at the conference echoed the environmental and social concerns brought forwards by CSR-advocates. There seems to be consensus among politicians and both environmental and business lobbyists that improved supply chain transparency and risk-management is beneficial for everyone. Gerd Billen, State Secretary in the Ministry of Justice and Consumer Protection, commented on the new CSR law that a stronger focus on the whole supply chain would benefit consumers, investors and businesses alike. Social and environmental risks along the chain are not just an ethical problem, but do also translate into business risk.

The most crucial turn of public attention in Germany was the catastrophe in the Rana Plaza textile factory in Bangladesh. Since then, significant political resources have been expended to alleviate the situation, if only in the eyes of the consumer. The German Textile Partnership, Minister Gerd Müller’s pet project, is considered a blueprint for multi-stakeholder-initiatives that aim to improve sustainability in GSCs. It brings together the largest participants in the German textile retail market, relevant associations and NGOs. The Ministry for Economic Cooperation and Development is currently exploring possibilities of a similar project in the Extractive Resources and Mining industry – highly relevant for technology companies that rely on rare earths and other precious metals from developing countries.

What unifies both international and domestic policy-making is a turn to multi-stakeholder approaches. The G20 has elevated this approach to a governing principle, saying that “communication and collaboration among all stakeholders will help promote the smooth implementation of [new policies] while balancing respective interests. G20 members are encouraged to strengthen communication and collaboration to help address challenges common to all members”.

A policy idea that is coupled with those processes is “Smart Regulation”: the concept that legislation would rely on good practices that are established from within the industry – a market-based form of policy production. This way, politicians and bureaucracy generate legitimacy for their legislative projects. For the public, it is a rather unsuspicious form of cooperation between the industry and politics (at least, less suspicious that lobbyism behind closed doors). From an industry-perspective, it provides opportunities to really get business-interests across and establish sustainability practices in the supply chain that are actually worth the effort. Most international policy guidelines are following this approach, encouraging voluntary company commitments and best practices being established from within the industry.

What is in it for companies and consultancy?

Wrapping this up, let us review what is relevant for political consultancy and can serve as opportunities to actually make an impact. First, we can note that bureaucracy and politicians are willing as never before to actually engage with companies. The “smart regulation” approach, which is gaining ground, is explicitly designed for co-regulation of the legislature with businesses. So it is of considerable benefit for companies to always be up-to-date on current policy preferences in the relevant ministries. It is advisable, as PWC points out, to consider both current and possible future regulations and voluntary standards, employing a proactive CSR strategy to mitigate negative business effects in the future.

Policy-making processes that are concerned with global processes, and supply chains, now incorporate extensive spaces for consultation, i.e. in the form of workshops, call for opinions. In some aspects, politics might even prefer not to pass legislation, but to encourage voluntary company commitments as a substation for hard regulation. Consultancies are best advised to closely monitor the development and current trends in domestic and transnational regulation of Supply Chains.

Considering all this, it’s obvious that business interests can best be heard and represented if companies cooperate and try to speak with one voice. Engaging in business associations and other for a will ultimately lead to better policy outcomes – for the state, businesses and the consumer.

Brexit’s counterweight – German people want more Europe

“Please don’t go!“ headlined the German magazine Der Spiegel just before the Brexit referendum, expressing the desire of a German majority for Britain to stay in the European Union. Only 7% of the German population supported the UK’s exit. This does not come as a surprise, as the German population perceives the UK just after France and just before the US as their most important partner for collaboration.

Brexit angst 

As a possible consequence of Britain leaving the EU, 58% of Germans expect other Member States to follow the British example in wanting to leave the European Union. Nevertheless,  the appreciation in Germany for the European Union rose: the proportion of those who connect benefits with an EU membership increased to 48%, while the proportion of those that associate more disadvantages to an EU membership, fell to a low of 14%.
Very much counter to the will underlying the Brexit vote, the desire for a closer union in Germany is now more widespread than the call for more national autonomy. 49% of Germans would prefer that member states unite more closely, 37% desire more autonomy, while 12% want no major changes. The Christian Democrats (CDU), Social Democrats (SPD), Left and Greens share in their support for a stronger EU, indicating that Germany’s European policy is unlikely to change after the next Federal elections in autumn 2017.

Political Berliners were particularly shocked by the result of the British referendum, which was seen by all parties as a very regrettable drawback for the European unification process. In response, they put forth a range of demands to accelerate integration, including the transfer of more sovereignty and competencies to the EU level, as well as overdue reform to EU institutions.

Merkel stays strong, and the Germans even stronger?

Immediately after the results were announced, Chancellor Angela Merkel insisted on ‘working to analyse the situation calmly,’ in her signature, even-keeled manner. Five days later, she explained in an official statement at the German Bundestag that while the UK’s decision to vote leave should be respected, the UK must still explain their desired alternative for a relationship with the EU. She underlined the bilateral relationship between Germany and the UK, their close alliance in NATO, and their sharing global leadership responsibilities, alongside the United States.

merkel-empfaengt-may
Theresa May and Angela Merkel meet in Berlin

The desire for deepened bilateral ties between Germany and the UK was underscored by the Chancellor during Prime Minister May’s first visit to Berlin on July 20th. Only two weeks prior, on July 7th, the German government installed an interdepartmental UK Task Force in the Ministry of Foreign Affairs to address the technical and political questions connected with Brexit. On the other hand, it will not be the Ministry of Foreign Affairs, but the German Chancellery, as well as the party and parliamentary party groups of the CDU/CSU and SPD who will have to manage the

German population’s rejection of concessions: 86% of the German people are of the opinion that the EU member states should not make any large concessions (49%) or make no concessions at all (39%) to the UK, only 10% of the people are for concessions.

A political puzzle

What became obvious in the weeks after the referendum was the growing rift between the suddenly united Christian Democrats (CDU and CSU) on one side and the SPD on the other.

Their disagreement, however, is not about Brexit itself. Both are willing to give the UK its due time to prepare for negotiations before initiating the Article 50 process; and both aim for a result that clearly differentiates between membership status and the UK’s future relations to the EU. Both also acknowledge the importance of the UK in security matters, and they appear willing to cede economic concessions in order to keep the European Union together.

Where both sides clearly disagree is over the future of the European Union itself. The SPD views Brexit as an opportunity to deepen European integration, mainly in security competencies. Secondly, they desire European funding for economic growth and labor markets, particularly in the south. Frank- Walter Steinmeier, Minister of Foreign Affairs, published a joint paper with his French counterpart Jean-Marc Ayrault focusing (not exclusively) on security and immigration policy, as did Vice-Chancellor Sigmar Gabriel with EP-President Martin Schulz with regard to economic policy. The CDU/CSU very much opposes SPD’s proposals for deeper economic integration. They agree that the common market needs strengthening, but vehemently oppose the SPD’s calls for harmonizing economic, social and labor policies as a means to do so.

Parliamentary pragmatism

Federal Minister of Finance Wolfgang Schaeuble of the CDU and Vice Chancellor Sigmar Gabriel of the SPD stand particularly divided about fiscal policy. While the SPD supports a counter-cyclical growth policy and calls for reorganization of the EU institutions, the CDU/ CSU coalition opposes further monetary easing and EU centralization. Media outlets such as Der Spiegel have called the debate the unofficial start of the election campaign.

Schaeuble was committed to strict fiscal austerity, but recently swayed the Commission to forgive Spain and Portugal’s burgeoning budget deficits that unquestionably surpass EU limits. Schaeuble’s intervention was definitely out of character, but may be explained by his overall political strategy. After all, Schaeuble understands that the EU can only solve its problems “promptly and pragmatically” and has advocated for more intergovernmental decision making, without the Commission leading negotiations. The Commission’s sanctions against Spain and Portugal would have faced approval by EU finance ministers, and Schaeuble stood to lose in either case: their rejecting the Commission’s decision would have cost Schaeuble political face, while approved sanctions would have likely cost Spanish Prime Minister Mariano Rajoy, Schaeuble’s conservative ally, his already-precarious government. Without a strong conservative front, Left-led France and Italy could outstep Germany’s CDU-led coalition in future EU-level negotiations.

Wolfgang-Schaeuble
Wolfgang Schaeuble, Minister of Finance

Meanwhile, Gabriel has always called for more EU solidarity and budget flexibility to allow EU leaders more room for maneuver, especially for crisis-stricken countries. Gabriel can count on the support of French President Hollande and Italian Prime Minister Renzi, whose countries could benefit from these arrangements. Although Schaeuble proved he is too pragmatic to be too dogmatic about austerity, it does not seem as if the CDU/ CSU parliamentary group will move away from its budget policy. Behind closed doors, Chancellor Merkel apparently strongly opposes any change of the Stability Pact. In her opinion, the EU’s budget is large enough; it should just be more efficiently distributed.

Portraits des Parteivorstands der SPD am 04.12.2011 in Berlin
Sigmar Gabriel, Vice-Chancellor, Minister of Economic Affairs and Energy, Chairman of the Social Democratic Party

At the same time, the SPD appears tired of their Chairman and most likely his candidacy for the chancellery. Many members of the party are disappointed with Gabriel’s crude criticism of Merkel as solely responsible for Brexit. There will be no immediate change, but with state elections in Berlin and other German Laender taking place in September, retaining SPD seats may prove vital for Gabriel going forward.

Towing a federalist line, with trepidation

In light of the recent terrorist attacks in Germany, the coup in Turkey and increasing criticism of her refugee policy, Chancellor Angela Merkel suffered a substantial loss of confidence in recent weeks: Currently only 47% of the population express satisfaction with her work, which is the second lowest rating in this legislature. Likewise, the satisfaction with the work of the federal cabinet has fallen. Currently Merkel’s cabinet has only a 44% approval rating.

Still, the overall political mood in Germany is to a large extent stable. If federal elections were to be held next Sunday, the CDU/CSU would receive a 34% share of vote; the SPD would receive 22%; the Green Party, 13%; and the Left Part, 9%. While the FDP (Liberal Democrats) could re-enter the next German parliament with a possible share of 5%, the national conservative AfD would for the first time after World War II be to the right of the CDU/CSU in the parliament with 12%.

The Chancellor is tracking the current fragmentation of the German political landscape closely. More so than all chancellors and CDU party leaders before her, Merkel makes use of opinion polls and observes medium-term and long-term trends in her considerations. With an eye to Germany’s internal politics and the upcoming state elections, she will therefore act cautiously, pragmatically, and free of ideology in talks about the reform of the EU and the Brexit, in order to avoid aiding and abetting the AfD or a theoretically possible alliance between the Left Party, the Green Party and the SPD.

In Brussels, Berlin will moderate European processes even more clearly than in the past, integrating the interests of smaller EU countries in order to prevent a further disintegration of the EU. British PM Theresa May will be able to rely on the decades-old tacit alliance between the UK and Germany. However, as long as Germany continues to pursue deeper European integration and the long-term objective of a political union in Europe, the idea of an alliance between Germany and UK, mooted by David Marsh at the end of July in „Der Spiegel“, is more an academically appealing debate than a real political option.

dicomm berät Ridesharing Plattform BlaBlaCar

dicomm advisors hat den erstmals vergebenen Public Affairs-Etat von BlablaCar in Deutschland gewonnen. Das Berliner Team der Politikberatung sicherte sich den Auftrag der weltweit größten Ridesharing-Community in einem Wettbewerbsverfahren.

BlaBlaCar ist die Mitfahrzentrale des digitalen Zeitalters: sicher und einfach in der Nutzerführung. Das 2006 gegründete und mittlerweile in insgesamt 22 Ländern präsente Unternehmen ist mehr als eine webbasierte funktionale Vermittlungsplattform. Von Anfang an wurde der Ansatz einer Reisesuchmaschine mit Community-Charakter verfolgt und damit der Nerv einer Generation getroffen, für die die Funktionalitäten und Vorteile sozialer Netzwerke selbstverständlicher Bestandteil des täglichen Lebens sind.

Bei BlaBlaCar können sich Fahrer und Mitfahrer anhand von persönlichen Profilen bereits vor der Fahrt ein genaues Bild des Reisebegleiters machen. Foto, Autotyp, Alter, Musikgeschmack, Interessen und Bewertungen von anderen Nutzern – alles Informationen, die für viele Menschen ebenso wichtig sind wie der angebotene Fahrpreis. Sogar die Gesprächsfreudigkeit wird bei BlaBlaCar abgefragt. Jedes Mitglied kann anhand einer Einstufung von einem bis drei „Blas“ angeben, ob es eher seine Ruhe haben will oder einen lebendigen Plausch während der Fahrt vorzieht.

Aus Mitfahrgelegenheit wird Ridesharing: Die mittlerweile über 500 Mitarbeiter haben ein zeitgemäßes Angebot geschaffen, das intelligente Lösungen für die millionenfache Vermittlung von Mitfahrgelegenheiten bietet. BlaBlaCar verifiziert jede Handynummer, arbeitet mit einem communitybasierten Bewertungssystem und kümmert sich mit seinem Mitgliederservice um Anliegen der Fahrer und Mitfahrer. Mitfahrer reservieren und bezahlen ihre Sitzplätze verbindlich online und Fahrer erhalten das Fahrtgeld direkt auf ihr Paypal- oder Bankkonto überwiesen. Online reservierte und bezahlte BlaBlaCar-Fahrten sind automatisch durch ein speziell fürs Mitfahren entwickeltes Versicherungspaket von AXA abgesichert.

Features wie diese sind Teil eines insgesamt voll auf Sicherheit, Usability und Zuverlässigkeit ausgerichteten Konzeptes, das mittlerweile 30 Millionen Mitglieder überzeugt hat und von 10 Millionen Reisenden pro Quartal genutzt wird.  Die Zentrale des bislang in insgesamt 22 Ländern operierenden Online-Unternehmens BlaBlaCar befindet sich in Paris. Seit dem Start in Deutschland im April 2013 befindet sich ein Büro in Hamburg und seit April 2015 ein weiteres in München.