ECONOMYNEXT – Sri Lanka’s exporters will have to meet tight entry rules to Germany with a new human rights law being applied to German importers who will have ensure that the entire supply chain complies, German Ambassador Holger Seubert said.
Several countries have introduced human rights due diligence laws and an EU wide has a draft legislation is under discussion but the German law is the most “far reaching human rights due diligence law” Ambassador Seubert said.
“It is not just to first tier suppliers,” he said. “But also down the supply chain. Violation of the law may lead to fines and sanctions.”
Markus Löning, Former Commissioner of Human Rights of the German government and Managing Director Löning Responsible Business and Human Rights, said the big push for human rights and sustainable supply chains started after the collapse of a factory in Bangladesh.
The Rana Plaza apparent factory collapse left over 1000 people dead.
“People and NGOs started asking where were all these goods coming from?” Loning said.
The supply chain law adds to existing standard and requirements on labour and environment some of which are voluntary.
Löning Responsible Business and Human Rights signed a co-operation agreement with JAAR Corporate Solutions (Pvt) Ltd, a Colombo based company with German and Sri Lankan consultants to help companies reach the standards by January 2023.
Andreas Hergenröther, Joint Managing Director of JAAR Corporate Solutions said many of the larger Sri Lanka exporters were “very much advanced” and had high labour standards and sustainability practices.
“It is important to anticipate legal trends, anticipate consumer trends and know what is required by national level,” he said.
“There is a high administrative burden and manpower requirement but on the other hand it also a huge opportunity.”
However they had to have processes in place to prove that they and their suppliers also complied.
It required traceability across countries.
A European Union law is also being drawn up which would go into effect later. The German law would apply to all imports.
Companies that meet the criteria can get larger market share and had new opportunities officials said.
“It helps foster competitiveness of Sri Lanka companies and secure their market to the EU,” Ambassador Seubert said.
Löning said the Russia and Ukraine conflict where companies suddenly found cut off from their suppliers in Russia and were looking for new suppliers in other countries.
“Sri Lanka is actually a good place to start business relationships,” Loning said.
However the country had to meet the new standards.
Rohan Fernando, Executive Director of Plantations and Business Development of the Aitken Spence Group covering Sustainability and Branding said the group has been part of a number of global initiatives.
“Being sustainable has been a differentiator for us,” Fernando said. “At Aitken Spence it has not been easy because we are not a one product company.
He said group had 16 different businesses and operated in nine countries and its agriculture businesses already had certification from organizations like the Forestry Stewardship Council and Rain Forest Alliance.
Sabine Ulmer, Co-Owner and Deputy MD of Eskimo Fashion Knitwear said they had to comply with multiple audits from different buyers and brands which had a set of requirements but there was no mutual recognition of rules.
She hoped the new German rule will lead to a unified requirement and not yet another new standard which would add to administrative costs and effort.
Ananda Pathirage chief executive of HJS Condiments Limited some standards including those promoted by industry associations seemed to be exactly the same but there was no mutual recognition.
Business Social Compliance Initiative (BCSI) and SA 8000 standard appeared to be the same but both had to be complied with and audited to reach foreign buyers. (Colombo/July14/2022)