The German Supply Chain Act (LkSG): Monitoring labour standards and environmental protection in Morocco

There are significant economic and trade relations between Morocco and Germany. For example, Germany ranked 6th in Morocco's trade balance in 2021; it imported goods worth 1.6 billion euros from Morocco.

 

Morocco is developing qualitatively from a low-wage location and thus offers points of contact for offshoring engineering services and research and development. The automotive sector and the aircraft industry are particularly well represented. Traditionally, the textile industry continues to play an important role in the foreign economy, but agriculture is also becoming increasingly important. In the service sector, Morocco has also developed into an important financial location for entrepreneurial activities in the direction of sub-Saharan Africa, in addition to tourism, which has always been significant.

 

The state wants to achieve a sustainable economic upswing by increasing private investment in Morocco. With the so-called Investment Charter (Charte d'Investissement), the goal was formulated to significantly increase the share of private investment in the total investment volume in the Kingdom. Currently, about two-thirds of capital investments come from the public sector. At the same time, investments should in future reach all parts of the country outside the urban and already existing industrial centres. 

Although human rights are playing an increasingly important role in Morocco's political consciousness, the practical application of the German Supply Chain Due Diligence Act (“Lieferkettensorgfaltspflichtgesetz”, LkSG) will require an increased level of risk analysis and management. The requirements for respecting human rights, their standards and the related corporate obligations in Morocco are not yet comparable to those of Germany or other European countries. As an ambitious emerging economy without significant natural resource deposits (except for phosphate) that would allow for a rentier economy, the country must work diligently and with good management to achieve economic prosperity as a prerequisite for the consolidation of social safety nets, environmental standards and other ESG goals. Around 20 percent of the population still live below the national poverty line; of these, a good 70 percent live in rural areas. 

 

The degree of regulation in the LkSG-sensitive areas is also relatively high in Morocco, although not as widely differentiated as in most EU states. Labour law, for example, provides strict rules for the protection of workers, i.e. with regard to discrimination, maximum working hours per day/week/year, maternity protection, protection of minors, holidays, protection against dismissal or safety at work. Labour inspectors and labour courts take their task seriously. Violations are therefore more likely in smaller companies outside the industrial hubs. Working conditions in terms of health and safety do not always meet the legally prescribed standards away from the gaze of the supervisory bodies. Against this background, attention should be paid to compliance with applicable standards in the supply chain in sectors such as agriculture, textiles, electrical accessories and the automotive industry, but also in mining (especially phosphate extraction).

 

When mining raw materials, especially phosphate, compliance with environmental standards plays a parti­cu­larly important role. In the world's most phosphate-rich country, 70 percent of the known reserves lie dormant; at the same time, Morocco is the world's largest exporter of phosphate. Modern agriculture is inconceivable without phosphates for fertilisation. Morocco accounts for 40 percent of European phosphate imports. The decomposition of phosphate releases fluorine in toxic doses, which contaminates both livestock and humans and creates the risk of contracting silicosis, or pneumoconiosis. Those working in the inland mines are, by their very nature, residents in the surrounding villages. These, as well as the immediate environment, are highly exposed to emissions from the fertiliser industry.