Making globalisation fair Supply chains

Global competition for markets and investors is tough. In some developing countries, fundamental workers’ rights (social standards) are being violated in order to quickly gain a competitive advantage.

Germany is working to ensure that these standards are implemented and complied with worldwide since they make a major contribution to improving people's living conditions and reducing poverty in developing countries.

In the 2030 Agenda for Sustainable Development, the international community has expressed its conviction that global challenges can only be resolved through joint action. The Agenda has laid the foundation for reconciling global economic development with social justice within the planet's ecological limits.

In collaboration with its partners, Germany is working to make the necessary change happen. Decent working conditions are at the centre of SDG 8 and SDG 12.

Measures to protect the environment and environmentally-friendly production processes conserve ecosystems and support the sustainable management of natural resources. They promote development and are economically viable in the long term. In addition, they provide a competitive edge for companies because more and more consumers are calling for sustainable production standards.

Governments and also companies themselves can use market mechanisms to create incentives for modern environmental and resource management. Environmental standards are an important building block in this regard. They foster development that is compatible with sustainability and help to conserve natural resources for future generations, too. The BMZ supports its partner countries’ efforts to introduce such standards.

Worldwide, there are more than 60 million people working in the textile and garment industry – most of them in developing and emerging economies. The sector is characterised by complex supply chains. Germany is engaged in activities to promote environmental and social standards at various levels of this highly integrated sector.

This is a topic that is pushed intensively by the BMZ within international organisations and in its cooperation with partner countries. Together with the private sector and civil society the BMZ is developing initiatives such as the Partnership for Sustainable Textiles (External link). The BMZ has also initiated the government-run textile label Green Button (External link). The Green Button is put on textiles that have been produced in line with highly ambitious social and environmental standards.

According to the latest estimates of the International Labour Organization (ILO), around 160 million children between the ages of five and 17 are working under conditions that constitute child labour, almost half of them under exploitative conditions that are often harmful to their health and dangerous.

Frequent causes of child labour are poverty, income volatility because of economic crises or natural disasters and misguided economic and social policies. Germany is working with great commitment to ensure that no more children anywhere in the world have to work under exploitative and dangerous conditions.

The BMZ human rights strategy states that, if there is a risk of human rights being violated, the German government puts values before economic interests.

With a view to asserting human rights worldwide in the private sector, the BMZ is involving all actors: governments, companies, trade unions, civil society and academia.

Fair Trade is a partnership based on dialogue, transparency and respect that strives for greater equity in international trade.

Consumers play a key role in all this. Their decisions about what to buy can have a direct impact on the working and living conditions of people in developing countries. The BMZ supports fair trade and provides citizens with information about how fair trade works, about fair trade products and about the huge importance of fair trade in the fight against global poverty.

An agricultural value chain comprises all the levels of the production, processing and distribution or export of an agricultural product. The competitive position of farmers depends to a large extent on the reliability of their contractual relationships with others in the value chain.

Fostering value chains through development cooperation interventions is especially useful and necessary if official structures are weak and there is a lack of infrastructure, adequate services, legal certainty and standards for quality and production. Promoting agricultural value chains is one of the priorities of the BMZ’s special initiative “Transformation of Agricultural and Food Systems”.

Every year several million hectares of forest are lost because they are converted into agricultural land.

In the 2014 New York Declaration on Forests, Germany and almost 180 other governments, corporations and civil society representatives made a commitment to make global agricultural commodity supply chains deforestation-free by 2020. In 2015, Germany, Denmark, France, the Netherlands, Norway and the United Kingdom signed the Amsterdam Declaration on Deforestation and the Amsterdam Palm Oil Declaration.

In late 2022, the European Parliament and the Council of the European Union agreed on a directive on deforestation-free supply chains, which is expected to enter into force soon.

Through its development policy the German government is helping to establish a stable and socially responsible world economic order in the spirit of a “global partnership”. An open and fair trading system which is based on clear rules and enables developing countries to integrate into global value chains is a precondition for achieving this.

To reach this goal, some important institutions and agreements that regulate the world economy need to be developed further. At international conferences and in negotiations, the German government advocates for the interests of developing countries and emerging economies to be given greater consideration, so that their products have a chance to compete on the global market.

Developing countries and emerging economies can generate significant revenue from their natural resources. This income is important for those countries’ economic growth and social development.

If the level of this revenue is not disclosed to the public, this can lead to mistrust, weakened governance and even conflict.

The Extractive Industries Transparency Initiative (EITI) is a global initiative for more financial transparency and accountability in registering and disclosing revenues from the extraction of natural resources. The German government has been supporting EITI since it came into being in 2003.

Through their business activities, companies have an impact on the living and working conditions of their employees, on their customers, on the environment and on the wider business environment.

The supply chain law, which came into force in January 2023, is one of the tools Germany is using to ensure decent working conditions worldwide. The BMZ is also supporting an EU-wide regulation on corporate sustainability, based on the UN Guiding Principles, and an EU regulation against products from forced labour.

The BMZ also supports the Global Compact (External link), an alliance between business, politics and civil society that was founded by the United Nations with the aim of strengthening corporate social responsibility.