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The implications of new supply chain legislation for the building sector

© Fairphone, via flickr, CC BY-SA 2.0

Too many firms are still going about business in ways that lead to exploitation of both people and nature. This also applies to the construction industry. Long overdue, the proposed Supply Chain Actin in Germany will bring us a step closer to focusing more attention on this issue. But the requirements still fall short in terms of consistency. The DGNB has a clear vision of what a fair supply chain looks like, and it continues to appeal for more voluntary action.

Let’s face the facts. There are downsides to globalisation. Some are seen in countries with valuable raw materials and degrading working conditions. Even today, people and the environment are still being exploited throughout the world to create prosperity for those in more fortunate countries. Germany is the third largest importer of goods after the USA and China. No less than 775,000 German firms import goods from Africa, Asia or America. Very few economies are so tightly intertwined with international supply chains. The country thus bears a major responsibility. One of the most important sectors of commerce in Germany is the building industry.

It may have been overdue, but the fact that draft supply chain legislation is now finally in place – demanding respect for human rights and greater transparency – is therefore welcome news. After all, almost nothing has been heard in recent years along the lines of voluntary commitments from companies to fulfil their due diligence obligations. Germany did call for more commitment, based on the Guiding Principles on Business and Human Rights passed by the United Nations, but fewer than 50 per cent of companies actually succeeded in achieving stipulated targets. A study conducted by the EU into due diligence in supply chains also shows that only a third of all companies carry out careful supply chain checks.

 Adding value: our vision for 2050

Our aim at the DGNB is to drive change and help make the world of construction a better place. An essential aspect of this change is that value creation is based on social responsibility, environmental friendliness and fairness – from raw materials to deconstruction. We have a clear vision for the years leading up to 2050: all stakeholders involved in the value chain will understand the benefits of responsible resource extraction. By enhancing transparency at every stage of the process, the required measures will be implemented in keeping with the underlying objectives. Resource extraction will be based on principles that safeguard similar opportunities for future generations. And there will be increased use of secondary materials by introducing suitable infrastructures and new technology that allows for building materials to be processed.

A criterion of responsible action

It is for these reasons that we have created a criterion within our certification system dedicated solely to responsible resource extraction. In concrete terms, the first step is to foster greater transparency and traceability with regard to the origins of materials, harvesting, cultivation, mining conditions and further processing. So we want to see companies disclosing all of this information. We give even better ratings to firms that bring in third parties to verify this information. Ideally, this spans the entire supply chain. Other things we check for at the DGNB are certain product labels so we can decide if they should also be recognised under certification. For example the FSC and PEFC schemes certify that local wood or timber was sourced from sustainably managed forests.

Pending legislation does little to help

The draft legislation feels like a compromise based on minimal requirements, which does little to help us at the moment. This is immediately obvious if you consider one of the key aspects of the planned legislation: it won’t come into effect until 2023! We have been campaigning for these issues at the DGNB since 2007. In addition, it will only apply to companies with more than 3000 employees, going down to companies with 1000 employees by 2024. In total, that is no more than 2900 companies. Compare that to the aforementioned overall number of companies in Germany: 775,000. In addition, duty of care initially only applies to the next link in the supply chain. It is not intended to enforce civil liability on companies.

What we really need is a law with immediate effect, legislation that applies to many more companies and rules that ensure we go back through the entire supply chain to check if conditions are harmful to the environment or violate human rights. We also need genuine incentives to do things differently by enforcing proper civil liability rules for due diligence violations. And we need greater emphasis on the duty of care when it comes to the environment. The aforementioned study issued by the EU Commission estimates that it would cost large companies just 0.005 per cent of turnover to implement appropriate due diligence measures (p. 427). But even ignoring these numbers, there are no arguments the business lobby could bring to justify abysmal working conditions.

An appeal for courage and more voluntarily action

We still have what we have stood for since our very beginnings, something actively believed in and embodied by our many members, as well as other stakeholders: courage and the will to go the extra mile without being asked to! We’re not waiting for the politicians and legislation. Build according to the DGNB criteria today and you already play an active part in changing the building sector. And if there’s one thing we can say to all those companies that are already ensuring their supply chains offer greater transparency, it is this: when you’re fast, you win on two fronts. Because even if legislation does still only have a minor impact, at least it promotes greater awareness of the precarious working conditions worldwide. Also, more regulations are likely to be introduced, inlcuding EU laws. Last but not least, I am confident there will also be rising pressure from society. According to Bertelsmann Stiftung, almost 90 per cent of Germans would like to see a new economic order.

 


Header picture: copper mine in democratic republic of the congo© Fairphone, via flickr, CC BY-SA 2.0

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Dr. Anna Braune

As environmental engineer, Dr. Anna Braune has a deep understanding of both, environmental effects and issues and technical expertise on processing, using and disposal of natural and industrial goods. With a focus on the built environment, she gained vast experiences by assessing technologies, building elements, entire buildings and sites using environmental Life Cycle Assessment methodologies, substance assessments, and others. Being very business-oriented, she always keeps economic constraints and opportunities in mind when proposing environmental preferable solutions. From July 2007 until October 2008 she was the Initiator and Founding CEO of the German Sustainable Building Council. From November 2008 until June 2015 she was at PE INTERNATIONAL AG as responsible Project Manager and as Principal Consultant. In September 2015 she joined the DGNB again and is now Head of Research and Trends at the DGNB.

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