Transfer of Science or Research

The good ethical goals underlying the new EU supply chain law are beyond question, emphasises logistics professor Christoph Feldmann from the International School of Management (ISM). However, from his many years of experience in logistics management in the industry and for Europe's largest trade association in this field, Christoph Feldmann expresses scepticism as to whether the aims of the new law can realistically be achieved, even though they are stricter than the German Supply Chain Act.

As the former Managing Director of the German Association of Materials Management, Purchasing and Logistics, Christoph Feldmann knows from practical experience how fragile global supply chains have become. Covid, wars and crises have greatly destabilised the situation to this day and put companies under great pressure: The result is a shortage of skilled labour alongside growing job losses, significantly higher costs with a corresponding impact on consumer prices, inflation and social prosperity, as well as increasing risks of supply bottlenecks.

The world has reacted differently to this. The USA and China are defending their markets and companies with protectionist measures and massive economic stimulus programmes, such as the Inflation Reduction Act, or with massive subsidies for key industries as part of a long-term state industrial policy. The EU has now added a new supply chain law to already existing numerous regulations. Feldmann is convinced that this will have a major impact on Europe and Germany in particular, the latter one being a driving force of the European economy, and the EU being a guarantor of social prosperity as well as of global political influence. The new Supply Chain Act will make it even harder to maintain this."

Provisions on supply chains hit the Achilles heel of the European economy

According to Feldmann, the sticking point of the latest EU directive is the high level of bureaucracy it entails and the liability risks that are difficult to calculate: "Any NGO can now sue on behalf of the victims for negligence in the event of non-compliance with social and ethical standards. In this respect, the new EU supply chain law goes beyond German law." However, the question is, for example: What is considered negligence and therefore the basis for civil lawsuits against companies?
It is an illusion to believe that the supply chain laws - both the previous German law and the new, stricter EU directive - only affect major companies: "Larger companies will now contractually oblige all suppliers and customers - regardless of company size - to comply with the legislation, with all the associated risks and the bureaucratic burden that cannot be borne by smaller companies in particular."
Paradoxically, the Supply Chain Act with its new right to sue could even counteract the cause of human rights and environmental protection.

Supply chain partnerships usually accelerate the development of economic cooperation, emphasises Feldmann: "Small companies often prove to be pioneers here. With their initially small supplier partnerships, which grow strongly when successful, they have an impact on new partners in the emerging countries and initiate good business practices through the important transfer of expertise. For almost all European companies, this also includes human rights and environmental requirements and thus makes a significant contribution to improving the human rights and environmental situation and increasing social prosperity in the partner countries."

European supply chain partnerships as a catalyst

The ISM logistics professor sees the establishment of supply chain partnerships, particularly with countries in the global South, as a vital strategic interest for Germany and the EU: "The declared aim here is to reduce dependencies on systemic rivals such as Russia or China." This goes hand in hand with the establishment and expansion of new supply chain partnerships, especially in less developed countries. However, the logistics expert believes that the new supply chain law will certainly deter many European companies from entering into these pioneering partnerships in the future due to the increased legal risks and bureaucratic burden. The field will therefore be left even more to non-European companies.

"This turns a good principle into the opposite: the pressure on black sheep is increased. But smaller, European companies will be more reluctant to look for new partners in less familiar markets," says the ISM logistics expert. He knows from his day-to-day work: "This is all the more regrettable as business partners in Africa and Latin America, for example, tend to want business partners from Europe for cultural and political reasons. Now they are more reliant on Chinese and US players, who present fewer hurdles than Europe. It is to be feared that this will do a well-intentioned "disservice" to human rights."

Background:
The International School of Management (ISM) is a state-recognised, non-profit private university and is one of the leading private universities in Germany. At locations in Dortmund, Frankfurt/Main, Munich, Hamburg, Cologne, Stuttgart and Berlin, the next generation of managers for internationally oriented business enterprises is trained in compact and application-oriented degree programmes. The range of courses includes full-time programmes, part-time and dual study courses as well as digital distance learning. In university rankings, ISM is regularly listed in the top places for its high teaching quality, internationality and practical relevance. It cooperates with around 190 partner universities.

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Wissenschaftlicher Ansprechpartner:
Prof. Dr. Christoph Feldmann
christoph.feldmann@ism.de
0170 – 88 50 80 1

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Weitere Informationen:
http://presse@ism.de