Sunday, November 17, 2019

Birgit Spiesshofer: "What is "sustainable"?" English Translation of Article published first (in German) in the Frankfurter Allgemeine Magazine Einspruch! (online) July 24, 2019

Dr. Birgit Spiesshofer has been undertaking truly important and path-breaking work in the area of the responsibility of business for harms that may be attached (that, of course, is the issue of the moment, that is the jurisprudence of "attachment") to the economic activities of enterprises and persons.  Her  monograph, Responsible Enterprise: The Emergence of a Global Economic Order (Munich: CH Beck, Oxford, Hart, 2018), is a remarkable analysis of the "state of the legal art"in this field and an excellent basis for thinking about the paths already being carved out for going forward (for my review of this work, see "The Enterprise of Responsibility:" Reviewing Birgit Spiesshofer, "Responsible Enterprise). 

Dr. Spiesshofer has recently written a short essay, What is Sustainable? The essay considers the hard, but rarely deeply engaged issue of manifesting sustainability as something other than what in the end invariably reduces itself to a set of usually incompatible "feel good" normative slogans that NGOs, the international community and business can embrace.  The focus in this case is on the work of the European Union (at least one governmental unit engaged in something ore than normative or narrative sloganeering) and its proposed sustainability taxonomy. It was originally published only in German, first published in the Frankfurter Allgemeine Magazine Einspruch! (online) July 24, 2019. DFr. Spiesshofer has translated the essay into English and the Frankfurter Allgemeine has graciously agreed to its re-posting here.

The essay and Dr. Spiesshofer's brief bio follow. 


What is "sustainable"?
Birgit Spiesshofer 

Column published first (in German) in Frankfurter Allgemeine Magazine Einspruch! (online) July 24, 2019

Since the Brundtland Report of 1987 "Our Common Future", sustainability has been a term used in an inflationary way and (differently) in a variety of contexts. It has also reached the capital market. Financial institutions have chosen sustainability as a business model, whether in the form of "ethical" banks, "green" financial products or "impact investments". In addition, normative systems such as the UN Principles for Responsible Investment have established themselves at the international level under the heading of "Responsible Investment", with the aim of integrating ESG (environment, social, governance) aspects into the capital market as comprehensively as possible. What these approaches have in common is that they link responsibility to the economic leverage of investors and seek to internalise external costs. In their own risk-oriented self-interest, investors should implement sustainability goals for themselves as well as for their portfolio companies. These approaches are flanked by sustainability indices and reporting. 
            The European Commission takes up these initiatives in its Legislative Proposals on Sustainable Finance published in May 2018, which have recently been further developed by new guidelines and three reports from the Technical Expert Group on Sustainable Finance. The Commission calculates that around EUR 180 billion p.a. will be needed to achieve the EU's climate targets for 2030. Against this background, it seems unavoidable to hold the economy as a whole responsible. However, the central question that has not yet been clarified is: what is "sustainable"? 
            The reasoning of the EU legislative package correctly assumes that, given the diversity of existing sustainability standards, it is difficult to compare companies and that this is an invitation to greenwashing, i.e. that enterprises pretend to be more sustainable than they actually are. However, it is doubtful whether the planned EU-wide uniform classification system ("taxonomy"), which is to be implemented by EU regulation, is the right and best course of action. This is questionable because the assessment of sustainability will not take into account the entire ESG spectrum, but essentially only environmental issues and the minimum standards of the ILO core labour standards. Even though it is understandable to limit the elaborate classification to urgent environmental issues, it does not make sense. Firstly, all other measures tie in with the full ESG sustainability agenda, i.e. an investor should invest in the most sustainable company in evaluating all ESG aspects. It only helps to a limited extent if the classification only takes into account environmental and elementary labour law aspects. The sustainability of investments cannot be compared with this selective approach. In addition, the sustainability assessment is linked to "activities". However, investments are made in companies. This raises the question, which is not easy to answer, how to proceed with the rating of conglomerates. 
            In addition, sustainability assessments can change quickly and are not free of political influences - see the discussion about diesel vehicles, which until recently were considered environmentally friendly. Even if the sustainability criteria are to be roughly circumscribed and further formulated through technical criteria and delegated acts - a hard legal corset and bureaucratic system is created which, firstly, is incomplete and therefore only fulfils its purpose to a limited extent and, secondly, will not keep pace with the dynamics of development, scientific knowledge and political preferences even with regular review. 
            Admittedly, the multitude of sustainability approaches is confusing and prevents comparability. However, it is also an expression of the fact that sustainability is a very complex, dynamic and above all political issue that eludes simple nomenclature. It would make more sense to create or support international guidelines with a holistic ESG approach and flexible governance, supplemented by European and national law where the internalisation of ESG factors requires public pressure and legal means of enforcement.


 Dr. Birgit Spiesshofer MCJ (New York University), Attorney at Law, has been an Of Counsel in the Berlin office since April 1, 2010 and advises primarily on regulation, policy and corporate social responsibility (CSR). Previously Birgit worked at Hengeler Mueller (1993- 2010), after becoming a partner in July 1995. Birgit started her career in 1989 at Feddersen Laule (today White & Case). In 1990 she worked as a foreign associate at Kaye Scholer Fierman Hays & Handler in Washington D.C. Birgit established the “Gaemo Group – Corporate Responsibility International” in June 2009. She was, inter alia, Chair of the CSR Committee of the Council of Bars and Law Societies of Europe (CCBE), Co-Chair of the CSR Committee of the International Bar Association and member of the Constitutional Law and Human Rights Committees of the German Lawyers Association (DAV). She is the founding Chair of the Compliance and CSR Committee of the DAV and a member of the CSR and Anti-Corruption Commission and the Environment and Energy Commission of the International Chamber of Commerce. Since her Habilitation (2018) in International Economic Law and Business Ethics, she is adjunct professor (Privatdozentin) at the University of Bremen. Numerous publications have named Birgit as one of the leading practitioners in the area of public law. Birgit publishes and speaks extensively on regulation, policy and CSR matters. In addition, she lectures on Business and Human Rights, CSR and International Environmental Law at the Free University Berlin and the University of Bremen.

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