Roundtable Event: Sustainability and Climate Responsibility in Global Value Chains

How does sustainability feature in international trade agreements? What regulatory frameworks are in place today? And how do countries and companies comply? Those where some questions addressed in a workshop jointly organized by the German Economic Institute (IW) and the Konrad Adenauer Foundation’s Regional Project Energy Security and Climate Change (RECAP) and Multinational Development Policy Dialogue (MNED) in Brussels on 1st February.

The ultimate goal is to implement sustainability into global production and supply chains, said Dr Pierre Gröning of amfori, a global business association for open and sustainable trade. This can be achieved from two very different angles: one is a top-down regulatory policy via international bodies e.g. the World Trade Organization. Such a multilateral approach is favored by the EU, explained Madelaine Tuininga, Head of Unit on Trade and Sustainable Development at the EU Commission’s DG Trade, although enforcement might prove difficult. Her view was supported by MEP Iuliu Winkler, who underlined the importance of transparency in global trade negotiations. He advocated a collaborative approach and private sector engagement.

A drawback of the multilateral system however is that it bases its policies on the lowest common denominator, said Rashmi Jose, Senior Program Officer for Investment and Regulatory Systems at the International Centre for Trade and Sustainable Development (ICTSD) in Geneva. To date however, the multilateral route is the best available, at least for the top-down approach.

Another option though are voluntary self-commitments by companies, which are checked and certified by (public) labeling organizations. Often, as demonstrated Dr Gerrit Schneider, Head of Corporate Sustainability Strategy at EVONIK, companies are not only certified by one but by several labels. EVONIK even developed its own initiative, called “together for sustainability”, banding together with other big players from the sector and establishing an auditing and control scheme on supplier performance along the value chain.

Obviously, both approaches can and should go hand in hand. European legislation on the reduction of F-gases for instance induced German METRO AG to set-up an F-gas exit program for its stores not only in Europe but globally, explained METRO’s energy manager Olaf Schulze. Costs, he said, are of course another big driver behind increasing sustainability efforts. To keep the energy bill down, METRO invests in natural refrigerants and produces its own energy via photovoltaic and combined head and power plants, thus creating zero emissions “green stores”, e.g. in China.

What emerged from the discussion is that sustainability has become a global issue, which will stay on the agenda and impact global supply chains as well as trade talks. The tinge of rich world “green protectionism” will only be avoided if talks are held transparently and multilaterally. Enforcement obviously is key. Thus, long-term independent assessments of global value chains must be conducted continuously.

What is needed to operationalize the respective policies are uniform, realistic and internationally transferable standards to be set by global politics, developed in collaboration with the private sector.

Be also so kind to have a look at the interviews we made with several of our speakers / guests:

• Dr. Gerrit Schneider, Head of Corporate Responsibility Strategy, Evonik, Brussels
• Iuliu Winkler MPE, Vice-Chair, Committee on International Trade, European Parliament, Brussels
• Dr. Michael Niese, Managing Director and Head of European Office WV Metalle