Friday, April 24, 2020

Birgit Spiesshofer: "Fridays for Future, Siemens or the Australian Government - who decides?" English Translation of Article published first (in German) in the Frankfurter Allgemeine Magazine Einspruch! (online) 16 March 2020

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 also writes frequently for the Frankfurter Allgemeine Magazine Einspruch! (online) on themes of corporate governance, sustainability, and its inevitable relations to systems of trade and political governance across borders. Though these essays are produced for a German audience, she has kindly agreed to translate some of them for re-publication here. Earlier translations include (1) Birgit Spiesshofer: "Green monetary policy - "whatever it takes"?" English Translation of Article published first (in German) in the Frankfurter Allgemeine Magazine Einspruch! (online) 10 December 2019; (2) Birgit Spiesshofer: "What is "sustainable"?" English Translation of Article published first (in German) in the Frankfurter Allgemeine Magazine Einspruch! (online) July 24, 2019 (see also here).

Siemens Won't Drop Australian Coal Mine Contract Despite Pressure 

From Greta Thunberg

Dr. Spiesshofer has now agreed to the translation of a recent essay-- Fridays for Future, Siemens or the Australian Government - who decides? , published originally in German in the Frankfurter Allgemeine Magazine Einspruch! (online).  The essay considers an important issue that touches both on the management of global production chains, and on the rationalization of corporate human rights and sustainability responsibilities. At the center of these issues, nowhere near consensus or resolution with any confidence virtually everywhere, is the interplay between legal and social licenses to operate.  The notion of a social license is not new though it has proven to be an elastic concept (e.g., here), especially in the context of extractive activities.  Its prominence increased as it was embedded as a key concept within the UN Guiding Principles for Business and Human Rights (2011; esp. Principle 11 Commentary) notion of corporate responsibility to respect human rights (connecting notions of human rights due diligence in the Second Pillar to a social license to operate. (Business and Human Rights: Towards Operationalizing the ‘Protect, Respect and Remedy’ Framework, Report to the UN Human Rights Council (Business and Human Rights Report), UN Doc. A/HRC/11/13, 22 April 2009, para. 46 ("Companies know they must comply with all applicable laws to obtain and sustain their legal license to operate. However, over time companies have found that legal compliance alone may not ensure their social license to operate, particularly where the law is weak. The social license to operate is based in prevailing social norms that can be as important to a business’ success as legal norms."), also here).  The issue is nicely framed in the essay and provides an important entry point for discussion here about convergence of law and governance even within the governance order of a developed state. 

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

Fridays for Future, Siemens or the Australian Government - who decides?
Column by Birgit Spiesshofer, published first (in German) in Frankfurter Allgemeine Magazine Einspruch! (online) March 16, 2020

Siemens has recently been made an example. Siemens had signed a contract to supply the signaling technology for a railroad that will transport coal from a deposit in Australia to the coast. Actually an everyday occurrence. No one denies that Australia is a functioning democracy and has approved the mining of the coal deposits and the construction of the railway line in constitutional procedures. All in an orderly fashion, one might think. That was also the opinion of CEO Joe Kaeser and the Sustainability Committee of Siemens - until the shitstorm swept over Siemens and sent a signal to the entire market that the days are over when it was enough to invoke the "legal license to operate".

Fridays for Future, together with Australian politicians of the Green Party and other non-governmental organizations, claimed a "social license to operate," which they denied to give to Siemens because Siemens' small contract for the supply of signaling equipment, which was however essential for the success of the project, indirectly enabled the mining of climate-damaging coal. They claimed that Siemens would be violating the spirit if not the text of the UN Global Compact, which Siemens signed in 2003. In its Principles seven and eight, it states in general terms that companies should support the precautionary principle in environmental matters and take initiatives to bring about a greater degree of environmental responsibility. What this means in individual cases is an open question, since apart from the "courts of public opinion", the verdict of a public of any composition, there is no court or other body that could authoritatively decide whether these principles have been violated in the Siemens case and what their relationship is to democratically legitimized decisions (even if they are considered wrong).

In the Steingart Morning Briefing (a German blog), this is celebrated as a "democratization of the democracy" and that business models today must be submitted to society for ratification, no longer just to the supervisory board. This triggers questions: what is the underlying concept of democracy? Isn't it precisely the essential function of a representative democracy to represent "society" and to reach decisions in constitutional procedures, which can also include plebiscites as in Switzerland, that take conflicting interests into account and balance them? Who is the "society" to whom the Siemens contract must be submitted "for ratification" - is that Fridays for Future, who undoubtedly have a justified interest, but who are neither responsible for having to stand up for an adequate power supply nor for having to struggle with the balancing of other, especially social interests such as the creation and preservation of jobs? Old School would be to influence the responsible politicians, if necessary also judicially, to change their coal policy. But that is laborious and complicated.

Through soft law such as the UN Global Compact and a far-reaching concept of corporate social responsibility, for which a causal link to "negative impacts" is sufficient, the debate on corporate social responsibility has created a much more effective and easier to use lever that can be used not only in transnational supply chains to balance a governance gap between industrialised and developing countries. It is also an ideal means against all kinds of unwanted projects, since in times of the Internet a company's reputation is a valuable and at the same time easily destroyed asset, and any company that contributes to or is connected with the project in any way, even legally, can be approached according to the broad concept of responsibility. Financing banks, investors, suppliers, operators or service providers, including lawyers, can be pilloried if they contribute to negative impacts. In the case of the Australian coal mine, banks and other signaling equipment suppliers had already withdrawn from the project for precisely this reason. So who decides? In any case, the erosion of parliamentary democratic control and the rule of law is manifest.

 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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