A social taxonomy: the EU’s plans are salt in the arms of the arms industry

DThe European Commission is currently examining large parts of the European economy to see if they are ultimately beneficial to society or more harmful. The so-called social taxonomy, analogous to the controversial green variant, is intended to signal investors which companies serve the community and are therefore suitable for increasingly important investments by social standards and which are not.

The panel of experts develops classification recommendations. The WELT accessible design advocates a two-fold judgment: do the products and services of the companies concerned bring social benefits in themselves, or are they socially harmful? And apart from the product itself, is the company socially responsible or not?

Accordingly, companies can be judged not only by their products, but also by whether they pay all employees adequate wages or how large the wage gap is between management and rank-and-file employees. Other examples were cited in the project: dairies and discounters would have to prove that they are paying farmers reasonable prices, property managers that their rents are not excessive compared to the region, and pharmaceutical companies that they supply vaccines to all countries that need them.

also read

However, there are already restrictions for companies without the Brussels guidelines. Take, for example, the arms industry: Many banks – not just in Germany – already have legislation that takes into account the EU taxonomy regulation in advance, says Hans Christoph Atzpodien, general manager of the Federal Association of the German Security and Defense Industry (BDSV). “It satisfies the diffuse mainstream flavor because it completely excludes anything related to armor and weapons from their portfolio.”

Banks confirm this. For example, LLBW does not finance the shipment of weapons of war abroad. DZ Bank excludes the financing of any kind of arms transactions if they are delivered to areas of tension or countries where there are “significant violations of human rights”. And “controversial weapons” such as nuclear, biological, chemical, land mines, anti-personnel mines, cluster bombs and autonomous weapons are not financed at all.

also read

artificial intelligence in defense.  Rheinmetall.  Lynx combat vehicle The Rheinmetall next-generation combat vehicle family presented its new Lynx KF41 (IFV) infantry fighting vehicle to an international audience for the first time at Eurosatory 2018.

Commerzbank also excludes the financing of the controversial weapons, as well as supplies to crisis areas. And: “Weapons-related transaction inquiries are subject to intensive and critical individual assessment,” says Frankfurter Bank.

And Bayerische Landesbank now only handles transactions for the German armed forces and national defense. Torsten Jäger, responsible for sustainable development at the Banking Association, confirms that the industry supports the EU taxonomy plans as they are considered correct and necessary.

The banks’ “predictive obedience”

Problem: “Banks suspect a loss of reputation among their shareholders when dealing with defense customers. In a kind of anticipatory obedience and in the absence of clearer regulatory barriers, they try to remove anything they suspect their stakeholders may not like from their field of vision and action, ”complains Atzpodien.

“By taking the financial base from armed forces suppliers and security authorities in Europe, banks are dismantling public goods that state institutions usually have to protect.” The problem could also be addressed in other ways, for example by giving the security and defense industry access to other sources of financing, for example the European Development Bank (EIB) or KfW.

also read

Egyptian submarine S44 just before entering the Kiel Canal, on its way to Egypt

“But so far there is no recognizable approach to this,” says Atzpodien. Medium-sized firms are particularly hard hit, while large corporations are more at home in the global investor league. “In Anglo-Saxon countries, for example, it is difficult to understand our thought patterns,” says BDSV’s managing director.

There is no noticeable help from politicians, many politicians would not believe that banks would indeed be willing to dismantle the security and defense industries. “Trade unions – IG Metall in particular – agree with us, but so far have not been able to get the necessary hearing from the coalition parties SPD and the Greens,” said Atzpodien.

also read

The A400M military transporter also belongs to Airbus Defense

The German arms industry has been struggling with the project since the middle of last year. Success: A first draft by EU experts concluded that arms manufacturers, the gambling and tobacco industries could not qualify for the Social Sustainability Label under any circumstances just because of their products.

Following considerable protests from arms manufacturers, the wording was watered down. Now only companies that produce weapons such as land mines or chemical warfare agents, the use of which is prohibited under international conventions, should be excluded.

A solution to the dilemma based on the French model?

A solution to this dilemma would be comparable to a solution to French nuclear power, says Atzpodien. “There, the French government has massively called on the Commission to classify nuclear energy as positively sustainable as it is the only way to generate a clear signal to the financial market. The same must now happen with our industry’s contribution to equipping the armed forces and security services. ‘ Because they make the necessary contribution to security and peace in Europe and therefore underpin all other values ​​of sustainable development.

The requirements resulting from the EU’s sustainability requirements cost companies a lot of money. “With sustainability reporting, there are further adversities and a further € 100,000 in additional bureaucracy,” says Harald Wack, Managing Director of specialist chemicals manufacturer Dr. Wack Holding. “As a chemical company, we’ve seen all kinds of bureaucratic monsters over the years: Reach, CLP, biocides legislation. Why didn’t the bureaucrats in Brussels even come up with the idea of ​​cutting red tape? “

You will find third party content here

Revocable consent is required for the transmission and processing of personal data to display embedded content, as embedded content providers require this consent as third party providers [In diesem Zusammenhang können auch Nutzungsprofile (u.a. auf Basis von Cookie-IDs) gebildet und angereichert werden, auch außerhalb des EWR]. By turning the switch to the “on” position, you consent to this (which can be revoked at any time). This also includes your consent to the transfer of certain personal data to third countries, including the USA, pursuant to Art. 49 (1) (a) GDPR. You can find more information on this. You can withdraw your consent at any time using the toggle and privacy switch at the bottom of the page.

The Foundation for Business and Family Policy is also concerned about high costs. – The reporting obligations planned by the EU will lead to excessive bureaucracy and companies will have to pay the bills – says Rainer Kirchdörfer, president of the foundation. “But we are not promoting sustainable development through an employment program for bureaucrats.” Family businesses would do anything to achieve the climate goals. “They don’t want to hire additional consultants for this, they want to hire more engineers,” says Kirchdörfer.

But it also shows that resistance and protest need not remain fruitless: the Commission was in fact supposed to publish recommendations on social taxonomy late last year; now it should be ready only this year. Commission circles say that after the debate on the green taxonomy in the office, there are serious concerns about the implementation of the project.

Here you can listen to our WELT podcasts

Revocable consent is required for the transmission and processing of personal data to display embedded content, as embedded content providers require this consent as third party providers [In diesem Zusammenhang können auch Nutzungsprofile (u.a. auf Basis von Cookie-IDs) gebildet und angereichert werden, auch außerhalb des EWR]. By turning the switch to the “on” position, you consent to this (which can be revoked at any time). This also includes your consent to the transfer of certain personal data to third countries, including the USA, pursuant to Art. 49 (1) (a) GDPR. You can find more information on this. You can withdraw your consent at any time using the privacy switch at the bottom of the page.

“Everything on stock” is a daily stock stock photo from the WELT business editorial office. Every day from 7am with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple podcasts, Amazon Music and deezer. Or directly through RSS feed.

Leave a Comment