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Commodities

Dirty steel

by Sheila Mysorekar

In brief

Copper ore miners in Zambia

Copper ore miners in Zambia

Major German car manufacturers use tons of metals every year. The primary materials are often extracted in very harsh labour conditions. By Sheila Mysorekar

Not only so called “conflict re­sources” such as diamonds or coltan are being produced with little regard for human rights; the labour conditions are harsh in ore mines as well, for instance. German companies use great quantities of iron, steel, copper and other metals.

The car industry is an especially important bulk purchaser. Therefore, civil society organisations have done research into whether the corporations are aware of what labour conditions prevail in their supply chain and what they do when such information is unpleasant. In September, the non-governmental organisations Bread for the World, Misereor and the Global Policy Forum Europe published a report on the matter. It confronts German car manufacturers with their responsibility for the labour conditions in the production of commodities as well as car parts.

Sadly enough, violations of human rights and environmental pollution seem to be commonplace in this business, as the authors Uwe Kerkow, Jens Martens and Axel Müller elaborate. They follow the entire value chain from ore mining to the finished car, with examples of raw material supply from countries like Zambia, Brazil and India.

From chunks of ore to the polished car

A car typically consists of steel and iron to more than 60 %. That’s why the authors checked diligently where and how iron and steel are being produced, which corporations dominate this industry, how mining is done and how iron is turned into steel. They point out that mining ore often leads to violent land conflicts, forced evictions and relocations. Their study illustrates the matter by discussing the case of India, among others (please see essay by Aditi Roy Ghatak in D+C/E+Z 2012/06, p. 234 ff.).

Copper is another metal which is indispensable in car production. The study explains that copper extraction requires the use of chemicals, which in many copper-producing regions leads to contamination of drinking water, for instance in Peru.

Another important component of cars is aluminium, which is made from bauxite. For the bauxite open-pit mining, tropical forests are cut down and poisonous residues taken for granted, which cause serious health problems for the affected communities. The civil society organisations present Brazil as a typical case. The authors conclude: “Many instances prove that human rights violations are frequent in the extraction of iron ore, bauxite and copper as well as in the production of steel and aluminium, all of which are essential for car manufacturing.” On this basis, they con­sider the responsibility of the car companies for human rights violations and environmental hazards in their supply chains.

The study takes stock of three major car manufacturers which have their headquarters in Germany: Volkswagen, Daimler and BMW. These companies produce 10.3 million vehicles annually, which in turn contain at least 11 million tons primary materials, as the document spells out. It analyses the structure of production and supply chains as well as the prevalent labour conditions. It also assesses marketing practices in the commodities business and offers an appraisal of the sustainabi­lity reports published by BMW, Daimler and Volkswagen as well as their major suppliers like ThyssenKrupp, the German-based steel maker.

Checking supply chains

At least on paper, the corporations admit that their social and environmental responsibility, including for human rights, is not confined to what happens within their factories, but must cover the supply chain too. The civil society critics maintain, nonetheless, that corporate sustainability strategies mostly reflect the managers’ worries concerning supply bottlenecks, rather than social and environmental standards in commodity exporting countries. The study published by Bread for the World, Misereor and the Global Policy Forum concludes that the corporations do not systematically check whether basic labour standards, human rights and ecological principles are respected in their supply chains.

The car industry takes a different view. Upon request by D+C/E+Z, the press office of BMW’s corporate head office stated that, as a matter of principle, the company wants human rights to be enforced, so all suppliers are told to strictly adhere to all legal regulations. BMW reports, moreover, that suppliers have been under an obligation since 2008 to issue a “voluntary disclosure about their status regarding relevant sustainability requirements”. The catalogue of questions is said to have been made compulsory even for small enterprises and service providers in 2010. BMW insists that recent queries confirmed that “no conflict materials from critical regions were used in the products of our suppliers, so such materials were not used in products of the BMW Group either”.

Daimler made similar statements, pointing out that its corporate sustain­ability guidelines for suppliers demand high standards worldwide and are part of the contracts with direct suppliers: “We expect of our suppliers that they communicate the contents of our guideline to their own suppliers, that they commit them accordingly and that they verify the compliance with the sustainability requirements along the supply chain.” However, according to Daimler, certification covering the entire supply chain would be “impossible due to the high complexity of products and delivery relations”.

In the eyes of Bread for the World, Misereor and the Global Policy Forum, that is not enough. They demand transparency in the entire production chain, from iron ore to the finished car. Their recent study argues that neither government regulations nor voluntary corporate activities have stemmed the abuse of human rights. The authors demand that Germany’s Federal Government should make compliance with human rights as well as environmental and social standards a precondition for development cooperation with commodity exporting countries.

Sheila Mysorekar