21. July 2020 | 07:28 CET
Gazprom, Saturn Oil & Gas, Shell - Winners of a supply chain law
In recent weeks, the German media have frequently reported on a so-called supply chain law. The aim of such a law is to ensure that German companies respect human rights and protect the environment in the procurement of materials and products. The world should become a better place and ruthless business practices should not endanger fair competition. Sounds like an exciting initiative that can protect consumers from the unwitting purchase of ethically and morally questionable products. The law has yet to be implemented because market participants fear a competitive disadvantage for German companies. But there would also be winners - even at the petrol pump.
time to read: 2 minutes by Mario Hose
Good oil is desirable
Imagine that the next time you go to a petrol station you have the choice between 'safe' and 'ruthless' petrol. The good kind comes from Canada, where human rights are respected and the environment is protected. The bad fuel, for example, comes from a country about which little is known except that the death penalty is the order of the day. The revenues from the oil business are used by the ruthless rulers to buy weapons, not to defend themselves, but to intimidate the population or neighbors. You can probably think of several countries that would fit that description.
Conflict of interest and security of supply
The situation of such a supply chain law becomes exciting in the case of companies or countries against which an embargo already exists, but where it is still necessary to purchase products or raw materials. One gets relatively quickly into a conflict of interest and an area of political interpretation. Would the German government (be able to) renounce the purchase of natural gas from Gazprom in Russia because of an embargo against Russia? Out of the question. Germany is simply dependent on natural gas from Russia for the foreseeable future.
What power does a supply chain law really have?
The proponents of a supply chain law cite strikingly clear cases where the observer will undoubtedly come to a decision as to what is right and what is not good for society. However, the situation becomes critical in areas that are less clear. For example, do I do more harm if I no longer buy certain products from developing countries with low standards and instead purchase the goods from certified sources in industrialized countries? Who pays for the loss of income for people from unregulated markets?
Can a German or European supply chain law create new standards for people and nature in weak countries and regions or is the opposite even caused because the pressure to earn is too high and people are forced to be driven into the arms of ruthless buyers from other parts of the world? We do not know. It would be an experiment.
Good Canadian crude oil
On the subject of crude oil, companies such as Saturn Oil & Gas from Canada would benefit considerably from a global supply chain law of the G7 or G20 states. However, due to the transport routes, it is illusory that processed crude oil from the Canadian province of Saskatchewan reaches a gas station in Munich. The domestic and neighboring US market would be large enough for Canadian companies if the import of questionable crude oil were to cease. Shell from Europe has often been the focus of critical reporting in the past and has already been severely attacked by environmental protection organizations on several occasions. But even such companies are developing and learning. It remains to be seen where the journey will lead.