Corporate Social Responsibility

We need all members of our societies to tackle the key challenges of the 21st century. Neither policymakers nor the private sector nor civil society is able to rise to global challenges like climate change, the fight against poverty or the protection of human rights alone. Along with political action and efforts by civil society, it is above all responsible companies that contribute to resolving the problems of our societies both in their own countries and abroad through their presence and influence. A case in point are situations in which they comply with internationally recognised social and environmental standards, even if the production country lacks corresponding legislation or does not enforce it.

The Federal Government has been promoting corporate social responsibility (CSR) for many years. Since 2010, the Federal Ministry of Labour and Social Affairs has led the German Government’s systematic CSR policies, which are based in particular on recommendations by the National CSR Forum, a multi-stakeholder body made up of representatives of the private sector, civil society, ministries, trade unions and the academic community. Crucial individual measures contained in the 2010 CSR Action Plan have already been implemented.

Through the further development of Germany’s national CSR strategy, the Federal Government aims to advance CSR in Germany in line with international trends and to act as a pioneer in its role as an export nation. Responsibility for supply chains and the implementation of corporate due diligence are key elements in these efforts. Thanks to the adoption of the UN Guiding Principles for Business and Human Rights by the UN Human Rights Council and the revision of the OECD Guidelines for Multinational Enterprises in 2011, the world has paid more attention to corporate due diligence when it comes to compliance with labour, social and environmental standards. The Federal Government adopted the National Action Plan for Business and Human Rights (NAP) on 21 December 2016. The NAP aims to implement the UN Guiding Principles on Business and Human Rights, improving the human rights situation in supply and value chains in Germany and around the world.

The NAP is at the same time the foundation stone of the German Supply Chain Act. A Federal Government business survey in the years 2019 and 2020 showed that only one-fifth of the companies based in Germany with more than 500 employees complied with their human rights due diligence obligation along their own supply chains sufficiently. Voluntary commitments were therefore not enough. In the coalition agreement of that time, the Federal Government agreed to take action on this issue at the national level and also to promote binding rules at the European level. The German Supply Chain Act entered into force on 1 January 2023 for companies with at least 3,000 employees in Germany; in 2024, the employment threshold was lowered to 1,000. For the first time, the Supply Chain Act creates statutory rules for the corporate responsibility of German companies in supply chains.

The Federal Ministry of Labour and Social Affairs also holds sector dialogues in the framework of the National Action Plan for Business and Human Rights (NAP). The dialogues aim to provide guidance to companies operating in sectors with special human rights challenges and help them implement the requirements related to their human rights due diligence obligation appropriately. This is a contribution to improve the human rights situation in global supply and value chains. The first sector dialogues are being held with the automotive industry and the energy sector.

As part of the Berlin CSR Consensus and under the leadership of the Federal Ministry of Labour and Social Affairs, the stakeholders from the National CSR Forum defined the NAP requirements regarding sustainable supply chain management setting out what constitutes good corporate practice. The Berlin CSR Consensus on corporate social responsibility in supply and value chains (in German) [PDF, 992KB] was adopted on 25 June 2018. The document points out important international standards, derives corporate leadership and management principles from these standards and explains the key elements of responsible supply and value chain management.

The increasing importance of corporate responsibility and human rights is also reflected in the European discourse. On 5 January 2023 the new EU Corporate Sustainability Reporting Directive (CSRD) entered into force. It will fundamentally change the sustainability reporting requirements for companies. In future, companies will have to report more comprehensively and according to uniform benchmarks. The European Commission is currently drafting concrete European Sustainability Reporting Standards (ESRS). It is estimated that EU-wide 49,000 companies will come under the scope of application of the Directive. The new provisions must be implemented by the member states within 18 months, i.e. by 4 July 2024. The EU supply chain law initiative is also making progress. The Corporate Sustainability Due Diligence Directive (CSDDD) contains human rights due diligence, but also environmental due diligence obligations and requirements for corporate social responsibility. The aim is that companies operating in the EU implement certain due diligence obligations in order to prevent that their business activities have negative implications on human rights and the environment in their chains of activity within and outside Europe. On 14 December 2023, a provisional political agreement on the directive was reached between the European Parliament and the Council. Further information is available here.

In the framework of the German G7 Presidency in 2022, the G7 countries discussed with representatives of civil society, the social partners, international organisations and renowned experts the added value of a binding international standard for business and human rights and relevant success factors. The G7 labour and employment ministers committed themselves to contribute to a global level playing field aligned with the relevant standards of the UN Guiding Principles for Business and Human Rights, the ILO Declaration of Principles concerning Multinational Enterprises and the OECD Guidelines for Multinational Enterprises. They have also committed to working towards an international consensus on business and human rights to increase compliance with these standards, including through compulsory measures. The G7 countries aim to engage constructively in discussions on this issue at the UN and ILO levels to explore ideas and options for a legally binding instrument at the international level.

A crucial element of the Federal Government’s CSR strategy is the CSR award.

Since 2013, it has been granted to companies that integrate sustainability in their business activities. The CSR award is designed to reward outstanding examples of corporate social responsibility and to motivate others to emulate such an approach. The award is conferred on companies that stand out with their fair business practices and staff-oriented human resource policies, use natural resources sparingly, protect the climate and the environment, are involved in their communities and assume responsibility for their supply chains. The CSR award does not only focus on acknowledging corporate social responsibility but it is also a learning award.  At present, the award is in its fourth round.