– Interview with Roger Peltzer, long-standing head of department at DEG – Deutsche Investitions- und Entwicklungsgesellschaft and co-creator of the Cotton made in Africa standard –

In an interview with the Bremen Cotton Report editorial team, Roger Peltzer describes how the administrative burden on companies could be reduced by harmonising standards. He sees potential in better recognition of existing certificates to avoid parallel audits and reports.

Bremen Cotton Report: The reporting obligations under the German and European Supply Chain Act have been criticised by business associations, and also by the textile trade, because they would lead to too much red tape. Is this criticism justified?

Roger Peltzer: Firstly, it should be noted that many textile companies signed up to voluntary standards long before the supply chain laws came into force and these guarantee compliance with the due diligence obligations required by the Supply Chain Act. More than 60 companies in the textile sector have successfully undergone Green Button certification, including large companies such as Lidl and SMEs such as Dibella. Also, 33 textile companies sell their products in accordance with the Cotton made in Africa seal (CmiA), including Otto and Tchibo, as well as medium-sized companies such as Harko. Many of these companies have also spoken out strongly in favour of the Supply Chain Act because they have called for a level playing field.

But there is one respect in which the business community’s criticism is entirely justified. The implementation of the Supply Chain Act could be made much less bureaucratic.

You say that the Green Button, launched by the German Federal Ministry for Economic Cooperation and Development (BMZ), would already have ensured compliance with the due diligence obligations required by the Supply Chain Act. Could you explain this?

At the end of September, a joint online seminar was held by Green Button and the Federal Office for Economic Affairs and Export Control (BAFA), which is the office assigned to the Federal Ministry of Economic Affairs that is supposed to ensure monitoring compliance with the due diligence obligations of the Supply Chain Act. In this webinar, an analysis was presented which showed that at least 85 percent of the obligations to be complied with under the Supply Chain Act were fully in line with the requirements of the Green Button certification. Where this was not the case, the Green Button requirements were in some cases ‘stricter’ or different terms were used, but they essentially reflected the same facts.

It also became clear that both Green Button and BAFA use trained personnel to check the relevant reports from companies on compliance with the Green Button criteria and due diligence obligations. Both procedures also have well-established complaints mechanisms for those affected in the event of standards not being met.

Does this not mean a lot of duplication work for companies that are both members of Green Button and obliged to report in accordance with the Supply Chain Act?

This is indeed the case. It is also difficult to understand from a taxpayer’s point of view that the BAFA, which is part of the Ministry for Economics, checks whether social, environmental and human rights standards are being met in the supply chain, and then the Green Button, which is largely financed by the BMZ, checks more or less exactly the same standards again.

This could be simplified considerably by the BAFA no longer requiring companies certified under the Green Button to submit further due diligence reports in accordance with the Supply Chain Act. It would take a limited amount of effort to ensure beforehand that both standards are in fact completely identical.

And this approach could then be easily extended to the EU’s Corporate Sustainability Reporting Directive (CSRD). The comprehensive reports to be produced as part of the Green Button certification should largely fulfil the requirements of the CSRD legislation.

This type of benchmarking would considerably reduce the amount of red tape. The trade associations should and must campaign for this. An additional advantage would be that this would incentivise more companies to become members of the Green Button or CmiA. And that is what the German government is striving for.

Non-governmental organisations are now claiming that voluntary standards or multi-stakeholder initiatives often fail to deliver on their promises and that there are repeated violations of standards on the ground, even by certified companies?

I have already explained that, as far as I know, the inspection mechanisms of Green Button are largely equivalent to those of the BAFA. In this respect, there is no difference in the verification of largely equivalent standards.

And, of course, there will always be breaches of the specified standards. It is no different with the organic label for food. However, no one questions the fact that the Demeter or Naturland standard guarantees high-quality organic produce in 95 percent of cases. It is important that there are sophisticated complaints mechanisms for Green Button that ensure that misconduct is sanctioned and remedied and that compensation is paid to aggrieved parties where necessary. In addition, the benchmarking I have proposed would not rule out the possibility of legal action in the event of infringements.

Thank you very much for the interview!

The interviews in the column “Question Time“ embody the opinion of the respective interview partner and do not represent the position of the Bremen Cotton Exchange as neutral, independent institution.