As of 1 January 2024, the Act on Due Diligence in Supply Chains applies to companies with at least 1,000 employees - among them, of course, several automotive suppliers. In their quest for guidance and good practice they - as well as companies from other industries - can harness the insights generated by the Sector Dialogue Automotive Industry.
The global supply and value chains in the automotive industry are complex, involving several sub-suppliers. This can limit the influence of single companies and the effectiveness of individual measures. To address this challenge, The Federal Ministry of Labour and Social Affairs launched the Sector Dialogue Automotive Industry in 2020.
The aim of the dialogue is to pool resources in an industry facing particular human rights risks and to work together towards improving the situation. This multi-stakeholder process includes car manufacturers and suppliers, business associations, civil society organisations and trade unions, the German Institute for Human Rights, sustainability initiatives and the Federal Government.
Practical examples and recommendations for action
During the last years, the members of the Sector Dialogue Automotive Industry have engaged in an internal peer-learning process. Finally, companies from other sectors can also benefit from the practical examples and recommendations.
One of the first results was the publication of guidelines for the five core elements of human rights due diligence (policy statement, risk analysis, measures and effectiveness tracking, reporting, grievance mechanism). The practice-oriented guidelines address the main challenges that companies face when fulfilling their due diligence obligations. They were developed by the multi-stakeholder group and adopted by all members unanimously.
On 27 September 2022, the guidelines of the Sector Dialogue Automotive Industry were presented at a conference.
Pilot projects on raw material supply chains and a grievance mechanism
Further publications have been developed in the context of two raw material pilot projects. Using copper as an example, members analysed the opportunities and limitations of voluntary sustainability standards. They developed an analytical framework for assessing the quality and suitability of standard schemes, recommendations for using leverage and going beyond audits and a practical guide that raises companies' awareness about appropriately integrating sustainability certifications into their own due diligence process.
With regard to lithium, a critical raw material for batteries, the members formulated expectations for responsible mining and discussed these with international stakeholders. The recommendations are available in German [PDF, 756KB], English [PDF, 745KB] and Spanish [PDF, 759KB]. They describe how companies can call for the implementation of sustainability criteria by mining companies and support them in doing so.
The cross-national recommendations on responsible lithium mining show how valuable multi-stakeholder processes are. The recommendations are not only the result of constructive discussions with key stakeholders, but also help our procurement staff to incorporate these perspectives into their work in a very practical way.
The third pilot project focussed on the potential of a cross-company grievance mechanism to pool resources and ensure accessibility for rightsholders. Mexico was chosen as the pilot region due to the presence of many German automotive companies and the particular human rights risks identified. The mechanism is now being rolled out as part of a separate project in collaboration with Mexican stakeholders. The Federal Ministry of Labour and Social Affairs will commission a scientific monitoring of the pilot. It is still possible for companies to join the mechanism.
Insights are shared across industries
Companies of all sectors can benefit from the experience gained in the automotive industry. At the same time, members of the automotive dialogue can learn from other industries. With this goal in mind, the Federal Ministry of Labour and Social Affairs and the Sector Dialogue Automotive Industry hosted a cross-industry event on 27 June 2023 titled "Supply chain transparency in politically sensitive contexts".
Over a hundred participants from business, academia, civil society, trade unions and policymakers came together to discuss how to achieve supply chain transparency - especially in contexts where countries fail to adequately implement labour and social standards or where the state itself systematically violates human rights.
The results and findings of the conference have been published (in German) and will be incorporated into the further work of the Sector Dialogue Automotive Industry.
A round table on supply chain transparency and competitiveness at the cross-industry specialist event on 27 June 2023 at the Umweltforum in Berlin.
In focus for 2024: How to manage the deeper supply chain and engage with rightsholders
The members of the Sector Dialogue Automotive Industry have committed to developing ambitious action plans in 2024, at an individual company level or collectively. They will follow the practical guide for effective preventative and remedial measures (in German) [PDF, 1MB], which was developed by an external service provider as part of the dialogue process.
With their action plans the companies will address the challenges of managing the deeper supply chain and of engaging rightsholder. How to increase supply chain transparency and leverage? How to incorporate the interests of rights holders, i.e. employees and residents of production or extraction companies and their legitimate representatives? How can companies engage with these stakeholders and what influence do the various local actors and communities have?
These and more questions will be discussed and tackled with concrete measures by the members of the Sector Dialogue Automotive Industry. As the past few years have shown: collaboration between relevant stakeholders is key to effective due diligence and positive outcomes for rightsholders along the supply chain.