It's my pleasure to welcome everyone to this hybrid setting.
So we have a couple of people in the real room here in Nürnberg, but I guess the majority
of our participants are joining online.
It's my pleasure and privilege to welcome Markus Löhning with us.
Markus Löhning is for me the number one practitioner of business and human rights in Germany.
He is the founder and managing director of Löhning Human Rights and Responsible Business,
a consultancy with the Mainz in Berlin.
Markus has a practice, practical background in business.
He was 15 years in business communications.
Then he was in politics for about 10 years.
He was member of the German parliament and then he was the federal commissioner for human
rights of the German government.
And so he brings to his practical work right now both of course experience in business
and in politics.
And we're very fortunate that he is with us today.
And yeah, Markus, the floor is yours.
Thank you very much.
Markus, thank you very much for having me, for inviting me and thank you all for being
there tonight.
So I'll take you through a couple of slides and try to talk a bit about the work we do,
some backgrounds and at the end I'll also have some slides looking into the future,
what are next steps in business and human rights.
Feel free to ask questions.
I'm not sure I can see when you raise your hand so someone should intervene or just ask
questions at the end of what I'm saying.
So speaking for around 45 minutes, something like that.
Okay, so when I'm doing to make this move, it doesn't work.
Okay, so this is my agenda for today.
So why did I start actually a management consultancy and not an NGO?
And what kind of pressures do companies actually have to comply with human rights?
Then I'll talk about some practical aspects.
So how do we actually establish human rights to diligence processes inside companies?
And I have four real life cases.
These are four clients that we work for whose reports are public so I can talk about that
and each of them is from a different perspective on the same issue at the end of the day.
And then I have a few questions on what's next and I have some ideas of what should
happen next.
So that's me.
And Marcus was saying I've been in politics for around 10 years.
I was a member of parliament, traveling a lot because I was a development spokesperson
and I was spokesperson for European affairs, I've seen a lot of countries.
And then I was the European, I was the German commissioner for human rights and I've been
active in party politics in Germany but also beyond.
Like I was the chair of the Human Rights Committee of Liberal International, which is the global
federation of liberal parties.
I've been working as a vice president of the European federation of liberal parties.
So why did I start a management consultancy and not an NGO?
When my mandate as human rights commissioner was ending, it was clear that I wanted to
do something meaningful and I wanted to stay in human rights.
I couldn't imagine going to a public relations agency or something like that.
I really wanted to stay with the topic.
And then as during my tenure, the UN guiding principles had been adopted, I thought it
might be interesting if you're from a liberal background, which is generally seen as a pro-business
background, and then if you try to get people in the business world into the human rights
world or at least try to bridge the gap that is there usually between human rights activists
and business people, that has always been the feeling.
I thought maybe I'm the right kind of person to work on this bridge and to work on building
this bridge.
So that was something I thought was going to be an interesting challenge.
And then also as I'm an optimist, I thought there's a lot of companies that fail on human
rights, but there are also companies that really make efforts.
Maybe they still fail, but they want to be successful.
I wanted to work with those companies, those that were serious about their efforts and
those that really wanted to make a difference.
And there are companies like that.
And the last point I was thinking about was, can we actually turn human rights into a business
case?
What kind of effect does the respect for human rights have on business cases, on the way
companies work?
How does it actually, what does that mean for costs?
Everybody always says, well, it just costs more if you respect human rights because there's
more processes that need to be installed.
But is that true?
I wasn't convinced it was true.
And the more I work on it, the more I find it's not true actually.
So these were my motives and founding the company.
This is my team now.
And the team consists of lawyers, there's three lawyers on this picture, Constanza,
Cecilia and Charles.
And each of them looks from a different perspective.
So this is Constanza's compliance lawyer.
Cecilia has a background in international human rights law.
And Charles has a background in regulation of financial markets with a special focus
on ESG.
And the other groups in the team are people with a background either in companies or in
economics and a few social scientists like myself.
And we all play our roles and it's good to have such a diverse team that sees things
from different angles because that's what companies need.
And also on top, only half of us is actually German speakers.
Most of us are from different countries or other countries.
So it's quite an international view as well.
And to give you just a view that I have from Germany, you might know some of these brands.
To give you an idea of what the variety of companies or organizations we've been working
for.
I'll speak more about WWF later, for example.
It's small technology, big trade, it's food, it's garment, it's all sorts of different
companies.
And also a company like Amphorie, which is standard setting body actually, which is then
also really interesting.
So companies started working on human rights because they feel under pressure.
I'd like to start with this picture of Kater Tumek because she's so iconic and she stands
for those thousands and thousands, millions of young people out in the streets and saying,
hey guys, take us more seriously on change the way our countries are run and change the
way the economy is run because we need to act more responsibly.
They have their focus on climate change, but acting responsibly or putting pressure on
companies to act responsibly always includes to also act responsibly on the human rights
and on the social side.
But it's more than just a few young people out there.
This really reflects in a lot of different aspects, economic aspects.
So banks and investors start understanding you don't get out of fossil fuel, you don't
behave or act responsibly, you're going to be less profitable in the future.
So there's very hard economic facts behind that.
And they put pressure on companies.
You want to recruit a talent?
Well, you better respect sustainability, respect social and human rights, and also respect
the environment if you want to have them because that's the kind of questions they're asking
when they're starting a new job or before starting a new job.
You want to convince consumers.
If you go to a supermarket nowadays, you'll always find organic and other products.
That's new.
It's completely new.
You can see that consumers are really changing their behavior.
They want this and it's there to stay.
And the same goes for business clients.
Big corporations start to understand sustainability is not a trend.
It's going to be there for the future of their company.
So they need to adapt.
So they're asking their suppliers and business partners to also behave responsibly and respect
sustainability standards.
Then there's two other hard economic facts.
The identification of employees with their own companies.
I mean, just ask friends, colleagues, whoever, you know, you do identify in a different way
with a company you're working for if you feel they are behaving in an ethical way, in a
responsible way.
They are respecting the rights of people.
They're respecting the environment.
And that reflects obviously also in the way you work if you're working for such a company.
So it is an even an economic effect behind that.
And the last point, which is which is brand reputation or generally reputation of companies.
That is also something that has triggered a lot before you had laws, human rights due
diligence law.
This was the main driving factor, actually.
Big brands, they did not want to damage their brands by having pictures of kids sewing shirts
or working on their shoes or whatever.
So there the Van der Plas incident was a major change because people started to understand
you are involved in such an incident.
This is going to reflect on your reputation, on your brand reputation, and it's not going
to go away easily.
So what I want to say is that there's a lot of different economic triggers or economic
pressure points on companies to become more sustainable.
It's not just the law.
So there's a lot around it.
And at the end of the day, the laws really reflect what people feel, which is what should
happen.
I'm going to talk more about the laws in a bit, but I want to put a special focus on
the Xinjiang situation because it's been in the media.
The Xinjiang situation is not the normal if there is a normal human rights situation for
companies.
The Xinjiang situation is a situation where the state, the government is putting one to
one point five million people under arrest in camps that most of you would have read
about and the things that are happening there are horrific.
There's sterilization, there's rape, there's torture.
There are things going on that are horrific.
We know of them because some people have been able to leave the camps and leave the country
and they have witnessed about this.
So they have told news outlets about it.
So this is a different kind of magnitude and a different kind of thing to be connected
with for business.
If you are involved in something which some consider genocide or an international crime,
this is something completely different from being involved where there's late payments
of salaries or things like that or there's no right to form a union, which is bad enough.
This is a completely different quality and companies need to understand this from what
I see and I'll be sharing the slides so you can follow the links that are in here to read
some of the things that are happening inside the camps.
Be aware this is not easy to read stuff.
What we see here is the political reaction to that and a major change to one of the most
important business partners, certainly for German industry but also for many other countries.
You see a shift in the mood of politics in the US as well as in the EU and also that
reflects in business.
I've been talking to business people, let's say 10 years ago about China and they always
said don't criticize China.
It's a hard day.
So they are so important for our business.
That's changing.
They don't say that anymore.
It's still important for their business but they see that they have a problem and they
see that it is a country that is not the normal country from around the world, which is maybe
a bit authoritarian.
So this is a different thing.
The politics are changing.
Laws are kicking in.
There's a discussion about a ban on products produced with forced labor.
So this is taking a different turn here, which takes me to the legal pressure.
Obviously all these economic pressure points are important for companies and they have
made companies move, especially companies that are in the focus of public attention,
whether it's because they have a brand or whether they are traded companies or listed
companies.
These companies have moved.
As I was saying when I was talking just before with Marcus and his virtual researchers, even
as liberal I have to be honest and say all of those approaches with national action plans
and UN guiding principles and so on have not really made the bulk of the enterprises change.
The bulk of companies sort of looked to the other side or did what they had to do if a
client requested it.
They did not really move on your price as they should have.
So I think it's a good development to see that there are laws that are coming into place
and that are demanding different things from companies, but they're all going in the same
directions.
Companies must take responsibility for what's happening in their supply chains and that
people are treated with respect in supply chains.
To give you an idea of what laws are requiring, I'll refer to the German law here and explain
more but most other laws are fairly similar to this.
So these are the key requirements of the German law and you can break them down into three
groups.
The first group of requirement is that the board should make a statement for the company
stating that they are going to respect human rights and stating how they will do that,
which means they need to describe the responsibilities inside their companies.
So they need to establish a governance structure.
You cannot just simply make a statement that has no consequences, but you need to really
publicly say what you are going to do.
So you need to describe your risk management system.
You need to describe the main risks that you have identified for your company and how you
will deal with them.
So a public commitment will make a difference to the outside world, but it will also make
a very important difference to the inside world, to employees of a company.
Because they will feel if the bosses are saying this, this is serious, let's work on it and
let's ask for a budget to work on it.
And the budget is what you need if you are working on the core, which is the second part,
which I would say is risk analysis, preventive measures, mitigation and also grievance mechanisms.
That's what I would call the risk management system as it is required by the German law.
So what do these four different points, what do they mean, what do they entail?
The first thing is risk analysis means you need to know your risk and you need to understand
them.
So are my risks as a company in the services I mine, let's say the cleaning people or the
people that are maintaining my buildings or the booking being that I have outsourced to
India or the call center that is in the Philippines or in Morocco, are those my main risks or
are my main risks actually in my production supply chains like the garment factory in
Bangladesh, excuse me, India or China or whatever kind of supply chains I might have.
Companies need to understand the quality of the risks.
So is it a risk that applies to a big group of people?
Is it a risk that is especially salient, which means that it's a life threatening or health
threatening risk?
Is it a risk that implies child labor or forced labor or very bad human rights violations?
And the company also needs to understand where its leverage is.
So where can it take influence?
If a company identifies a risk that may not be the worst of all risks, like for example,
the people in the cleaning team are not, you know, they're not getting the minimal wage
which they should be getting.
That may not be the worst of all offenses, but it's an offense that the company can change
immediately.
So it has to do that.
If it finds risks that are really bad, like child labor, forced labor, that's also something
where a company must act immediately.
There's no tolerance.
There is no waiting period.
This is something where companies need to act immediately.
And then you have a whole, let's say, field of risks that are where your influence is
maybe limited, where you can say, okay, this is a human rights violation or human rights
risk when mediation, remediation is possible.
So I can do something about it next week or the week afterwards.
So companies need to understand these risks and they need to bring them in an order in
which they want to deal with the risks.
And that's the second part of the risk management system, that's preventative measures.
So you need to make sure that if there's a risk, an infringement rule or the likelihood
of an infringement is as low as possible.
A lot of the risk management is around probabilities.
So if you find there is a high risk, let's say a 60 or 80% risk that over time will take
place in the garment factory, you need to do something to bring this 60% risk down to
40 to 20 to 10 to 5% so that the risk that an infringement is taking place is getting
lower month by month or year by year.
So a lot of the risk management is aimed at these kind of risks to lower the probability
of this probability.
The third point in the risk management system is mitigation.
So what you do if something is happening, you find it ongoing, your responsibility as
a company is to end that immediately or to make your supplier or your supplier's supplier,
put them under pressure and say you need to end that immediately.
So that's the mitigation part.
And if there's a damage occur like whether it's health or whatever happened to the person,
there must be a way that there is remediation.
So that can be a money compensation.
It can be that person needs to go to the hospital.
If it's discrimination cases, for example, then the structure needs to be changed or
training programs need to be implemented.
So remediation is part of what your responsibilities as a company.
The fourth part of the risk management is the grievance mechanisms.
So obviously, if something goes wrong in your own company or with your suppliers, people
that are victims of the human rights violations need to be able to tell someone and say, hey,
something is going wrong and it needs to be stopped.
And as very often, the problem is the boss.
They cannot go to their boss and say stop it because the boss is the problem.
So there needs to be some other mechanisms where they can complain and bring forward
the grievance so that you as either the employer of this person or the customer of this supplier
that you know about the grievance and that you can do something to stop it.
So these four points make the core of the risk management system.
Risk identification, preventative measures, mitigation and remediation and the grievance
mechanism.
And the third, let's say, big bucket of things to do is documentation and communication.
They call it documentation in the German law, which you need to know what's going on.
You need to document it also.
You need to look back into your files because you need to see did we actually improve compared
to years before.
So there needs to be a documentation and also there needs to be a yearly report and communication.
The German law is not very complete regarding communication efforts that can be made.
But it's a clear bucket.
So it's the governance that needs to be done and the commitment is a risk management system
that needs to be in place and there needs to be public communication about what you're
doing.
So these are core elements of human rights due diligence.
It's the German law, but it's very similar to most other laws.
Now to give you an impression of what's happening in other countries, I'm not going into detail,
but it's most of them started as reporting laws and then they move forward on mandatory
human rights due diligence, which is the way forward, which is important.
The U.S. are a bit different in the way they do that.
They don't have mandatory human rights due diligence so much.
They have, they're using their border control and they say, okay, no good is allowed to
enter the U.S. if there is a suspicion that it has been made with the help of child labor
or forced labor.
The U.S. House of Representatives has just passed a law which makes that ban even stronger,
but a lot of different laws in different countries, which makes it difficult for companies as
well.
So I very much think it's a good idea that the EU is taking an approach to have a uniform
set of human rights due diligence law and regulation for the whole of the single market.
There are different law packages actually out there.
Some of them are already enforced, mainly looking at the financial sector and there
are two big packages that are in the making, so to say, that are looking at trade and industry,
which is this so-called sustainability governance legislation, which is going to look at mandatory
human rights due diligence and director's duties.
And there's the corporate sustainability reporting, which is going to look at the publication
efforts that need to be made.
I believe it's good that this is taking place.
It will make life harder for some companies because the thresholds will be pretty low,
probably.
But it also will make the life easier for some other companies, because if you have
business across the EU, it's good to have a uniform law and you don't have to report
like this in France and in a different way in Belgium or in Germany.
So it makes things easier for companies.
The main point I see is that if the EU has a big market, a big economic unit sets these
kind of standards, it will have major influence on sourcing countries.
Companies in countries that are in business with the EU or with companies inside the EU
will align with these standards because they say, we want to be in the EU market.
That means we need to comply with sustainability standards that are enforced inside the European
Union.
So you will have hopefully a similar effect as you have with GDPR, for example, where
the EU was really initiating worldwide standards.
I think that's something that was forgotten in the debate about the German law, that we
are a lot more than just a bunch of people getting together.
If we are decided about what we want to do, we have the power to establish standards way
beyond our borders.
I'll come back to the European law at the end of my keynote.
This is just a matrix that we filled in with all the different laws to give you an idea
of how different they are and how nearly impossible it is for companies to comply with all of
that.
It doesn't make life easy for companies.
It's good money for consultants and lawyers, but it's not really necessary.
But what's interesting is that all of these laws, they have the core and that's also the
core of the German law.
It's always the same thing.
Since you need a policy commitment by the board, by the top body, you need risk identification
in place.
You need measures that are in place to prevent or to mitigate.
You need monitoring and governance, which means that you need to look at what you've
been doing.
Did the measure I take lower the risk of a certain human rights violation actually or
did it not?
So was the measure I took successful or not?
Do I need to adapt it?
So monitoring is really important.
Remedial action, I've talked about that before.
Grievance mechanism, complaint mechanism, they need to be part of the package just as
well as reporting documentation, the whole communication aspect of it all.
Especially the communication is sometimes hard for family-owned businesses because they
come from a tradition where they didn't publish that much because they felt it's family business
and nobody should know this is different.
You need to be transparent.
You need to make publicly available what you're doing, the risks you identified and what you're
doing to mitigate these risks.
What I want to say with this slide is really that as the core of it all, or let's say the
first trigger of it all was the UN guiding principles on business and human rights.
That's why all of these different laws have a similar core and you can actually answer
them all with one process.
That's the process that the OECD designed.
It is actually the implementation of the UN guiding principles for business and human rights.
Again, you will find the elements I've been talking about before, responsibility and governance,
then the bits that deal with risk management, identification, mitigation, and so on, and
the communication.
At the end of the day, it's always the same things that need to be there.
Now, let me briefly talk about how to implement this because that might be interesting.
It's a complicated process.
It's not easy.
Companies generally have no or nearly no knowledge about human rights because they're product
designers, they're engineers, they're salespeople.
They're all sorts of people with all sorts of knowledge, but usually they don't have
knowledge about human rights.
That's why it is quite complicated for companies to understand what is demanded and to put
it into practice.
How do we build human rights due diligence with companies?
Basically, we're taking stock.
That's step number one.
What's the highest risk?
What are the big risks that you have in your company?
What is your capacity to deal with these risks?
Risk assessment and a high level gap analysis looking at management capacity.
Then the logical second step is to set up the risk management.
Understand the risks in more depth and build management capacity to deal with the risk
appropriately and bring into place all the different tools and instruments that need
to be there.
These are just some examples here, but they are the core examples that need to be there.
When we work with companies, very often we find they have stuff.
It's not that they have nothing, but they have things in place and that just needs to
be adapted.
That's what the second step is about.
Then the third and fourth step are build the monitoring, build the grievance mechanism
and then go for the communication.
The communication, again, if you understand it in a wider sense, it will turn into a business
case or help you turn human rights into a business case regarding, for example, the
recruitment from talent or motivation of your own employees or even if you want to advertise
your products.
For some products, it makes a difference if you say this is ethically produced, we know
what's happening in our supply chain.
People will respond to that.
It's not just technical reporting, it's also about communication and improving your business
performance.
These are some tools.
I'll just briefly brush over them.
This is an interface typically, for example, procurement persons would see.
You look at sector-specific risk and country risk.
Let's say there's a common score which is built from these two things and which will
tell you what you need to do.
It's based on a big database which contains countries which you see in the background.
In Serkis, there's a high risk in China for example for forced labor and there's a high
risk in India for child labor and so on.
You need to look at these specific country risks and then you need to also apply them
to your buying category.
You will have a different kind of risk if you're buying t-shirts from India than if
you're buying pharmaceutical products from India or automotive products and things like
that.
Usually, risks are connected to low skill levels, to low education levels of those producing.
You need to combine these two risks to know what to do.
That's the same table basically, a bit bigger.
This slide I'll just briefly explain a decision tree.
If a company looks at the new supplier, for example, and then based on the country and
the sector risk, we'll have an overall risk.
It's either high or medium or low.
If it's low, obviously you go ahead, but if it's medium or high, you need to take a measure
to say, okay, how can I reduce the risk of falling into the trap?
That means for example, if it's medium, you send a questionnaire to the supplier and say,
okay, what kind of policies do you have to place?
How do you make sure there's no child labor in your factory and so on and so on.
You say, okay, the context is not a high risk context.
This is a context where probably if a factory is well run, the risk of human rights violation
is fairly low.
A small measure like a self-assessment could be enough.
If it's a high risk environment, you need to do more.
You need more information.
You need to perform an audit.
You need to send an auditor that looks at the factory or you need to do more context
research.
You need to know, did NGOs publish anything about this factory or the like?
You need to do more in-depth research to really know whether your potential new supplier has
everything in place.
Then again, from the results of that second step come the results of the next step.
One of the results can be that you say you're not working with the supplier because the
supplier is such a high risk that there's no way you can deal with him.
But usually it's about engagement.
It's about working with suppliers, improving their situation.
Delisting is always just the last possible consequence that you take and you try to avoid
it if it's possible.
Now let me take you through four cases that we've been to, not in detail, just on a high
level to show you different ways that human rights due diligence can work.
Now if you're thinking of the World Wildlife Fund, human rights violation is certainly
not the first thing that crossed your mind because they're an NGO, they're the good
guys, they're trying to make the world a better place with working on natural reserve, protecting
the environment, fighting climate change, protecting biodiversity and so on.
They're the good guys.
Last year they had, two years ago they had allegations against them that some of the
eco-guards they have in their natural reserves actually tortured people.
There was an allegation that someone was murdered.
There was an allegation that a woman was raped and that generally the eco-guards did not
respect the rights of villages living inside or on the fringes of natural reserves.
And that shocked them.
And it shocked sponsors and people said, well, you know, of course I want nature to be respected
and to be protected, you know, but not at the detriment of people.
So WWF asked us to look at their internal processes and that's what we did.
The report is public, there's also an English version of this report if you're interested.
So we looked at their internal processes and said, do they, when they're setting up a natural
reserve, actually ask the right questions?
And so the key finding is actually they were asking lots of questions about tigers and
so on and so on, but they asked fairly little questions about people living around there.
And so we helped them adjust their processes in a way that now when they are developing
a natural reserve or a new project, and also that's true for ongoing projects, they are
also asking questions about the human rights situation around it.
Because they clearly said, and that's the statement they made in line with the UN Guiding
Principle, they clearly said, of course, protection of human rights is something that is at the
key of our work.
They cannot be a protection of nature or animals to the detriment or against people.
So they have made an enormous effort in changing their approach, in adding question, asking
more questions, also asking their donors to give more money to carry out human rights
due diligence before setting up a new natural reserve.
And I think that's a great example of leadership of seeing, okay, there is something we did
not see, we had a blind spot, let's change that.
And they're on a very good way now.
This is a completely different perspective.
This is a bank, ASN Bank is a Dutch bank, and they are invested in a lot of different
companies.
And so they were asking the questions, what kind of responsibility do I as an investor
actually have that the investee company respects the UN Guiding Principles for business and
human rights?
And that's an interesting question, because it's a question that concerns a lot of companies,
a lot of banks, a lot of funds.
What's my responsibility to make my investee company, which is a business partner, which
you can actually look at as someone in your value chain to make them respect human rights?
Is that different from what a garment supplier has?
Or is there a difference there?
We clearly said in this little report, we clearly said that it's the same responsibility.
You have a responsibility to look at your investee companies and to push them to be
compliant with laws like the German Lieferkettinggesetz, but also to be respectful towards the UN Guiding
Principles for business and human rights.
And we're showing a couple of instruments that investors actually have to do that.
You can find all, not this one, but all the other reports, you can find them on our website.
Different story, different client leader.
They're a big trader, one of the biggest traders in fruit and vegetables in Europe.
And they asked us what is actually going on in the fields where we collect berries in
the south of Spain.
And I find it especially interesting that it is inside the European Union.
It's not somewhere far away.
It's very close.
It's where we go on holidays, it's in front of our doors.
And so they asked us to look, to carry out an impact assessment in the fields in Huelva
where they harvest their berries.
The outcome was there was not a systematic bad violation of human rights, but there was
like a neglect.
It was a neglect of protection of vulnerable people.
This is seasonal work.
You harvest berries between April and July.
So that means there's women from Morocco, Bulgaria, Romania, mainly coming to Spain
and they do this work.
They don't speak the language.
They don't know who the union is or who the mayor is, or they don't dare to go to the
police.
So people take advantage of that.
They don't pay the minimum wage.
They don't give them what they're entitled to.
There's no union that takes care.
So there's something that we found inside the EU that needs attention and that needs
to be changed.
And LIDL has taken a couple of measures to now address these topics with its suppliers.
Last case I want to show you is the Myanmar case, because most of you will remember the
coup that took place.
Myanmar was on its way to become a democracy and it changed the path that the military
taking over.
So what you do if you're a company and you're sourcing from Myanmar.
We looked at the situation and gave some advice to companies because nobody wants to be involved
in a subsidiary of the military, providing profits to this military machine.
On the other side, people have jobs in Myanmar.
They need the income.
So there's a decision to be made.
We advise clients to stay in if possible, if there's no contact with the military and
to give jobs and income, create jobs and income for people there.
This is just a brief paper that we created on that topic.
So last point I wanted to make.
I think things are changing regarding sustainability in general.
There's an article in Frankfurt, which is known as a very conservative, very business
friendly newspaper.
I do read them and I find that they have changed their course regarding sustainability in a
very amazing way.
This article is unfortunately it's behind the paywall.
This article is describing how big companies are actually changing their business models
because they understand that sustainability is here to stay.
It's not just something that comes and goes.
It is there to stay and is going to influence business in a very substantial way.
This article is describing that in quite an impressive way because it shows that there
is a tidal change inside the mindset of managers that's going on at the moment.
It feeds my optimism that change can't be made.
Second source of optimism is the new government we have in Germany.
I must say at the moment, they've only been in charge for a week, so I can still be an
optimist and a fan of the government.
I believe they took a very important decision when they were looking at the German and the
European supply chain law.
That is something that needs to be continued and I made some points why it is important
that we need a uniform European regulation.
They're picking up.
That's what they are planning to do.
Let's hope they will really do it.
I think they will, but you never know.
I think that's a very good sign and I think we will see progress here.
That's the last slide I wanted to share with you coming back to the European legislation.
I think the kind of legislation we need is that we need to get rid of all that national
legislation which has the same core but has lots of differences in the way you report
here and the focus it has there.
I think we should get rid of that and have a uniform European legislation.
I think I do believe it should apply to all companies.
I don't think a threshold of size makes a lot of sense.
I think a threshold of risk makes sense.
A 25-person company that deals with raw materials is a high-risk business even if it's only
25 people.
While a 500-person cabinet-making company somewhere in Belgium can be low-risk if they're
using wood from the surrounding woods or from Poland.
It's not a big risk even though they may need 500 people.
It's not the size.
It's really the risk exposure that should be at the center.
I think it's important and I hope that they will establish mandatory human rights to the
diligence fast.
I believe it would be a wise move as also John Ruggie was saying to split it from the
question of liability because liability question has delayed the German law by two or three
years and laws are not made forever.
They will be reviewed.
Let's start with what's necessary and that's mandatory human rights to diligence and then
see about the liability in two or three or four years what needs to be added.
But it will scare people at the moment so that's where I think liability should be postponed
a bit.
The last point there is make it work with the financial regulation.
It's really important that financial actors understand corporate reporting for example.
That it is organized in a way that banks can read the reports and understand the reports
and make assessment.
So a uniform reporting approach is really important so that the financial sector can
play its full role.
As I was saying before when mentioning the article in Frankfurt, I remind you the financial
sector is a very important driver at the moment.
They're really driving change.
They're cleaning their portfolios from companies they see associated with risks.
There's been a case where Unilever was trying to sell its tea business in Kenya just recently
and they had three bidders and two bidders said no the human rights risk attached to
tea business in Kenya is so high we're not going to invest in that.
So this starts influencing decisions in M&A in investment and so in a way that companies
will have to adapt fast.
So bring these legislations together so they can work together well.
That will make things move even faster.
And that was it.
Thank you very much.