Buying Social Responsibility

Saving the World in Dortmund

In 2015, the city of Dortmund made its own small contribution to saving the world. Based on a Europe-wide public tender, the city awarded a contract for the purchase of working clothes and protective garments worth 100,000 Euros. What made this government procurement special was that the contract had to be awarded to a bidder who could demonstrate that all suppliers were taking credible and effective steps to exclude any workers’ rights violations all along the chain of supply and production.

This approach to “socially responsible public procurement” has a certain global effect. Products ultimately sold in the United States and Europe are mostly produced and traded in other parts of the world, often under dangerous conditions. These circumstances include repression of trade unions, forced labor and discrimination against women workers as well as child labor, and serious work safety issues. By asking for compliance with essential labor rights and other social standards in public procurement procedures, the public sector can contribute to combating these abuses in multiple ways.

Impact of Socially Responsible Procurement 

On a very basic level, it makes a difference for public contracting authorities to buy goods from socially responsible sellers simply because of the magnitude of their purchasing power. The European Commission indicated that the public purchase of works, goods and services accounts for around 18 percent of the European Gross Domestic Product (GDP). Considering that the European GDP amounted to 14.6 trillion Euros in 2015, public purchasing had a share of around 2.6 trillion Euros. If we compare this figure to the entire German GDP, which amounted to 3 trillion Euros in 2015, it becomes clear that public purchasing is of great economic importance.

Making conscious use of the public sector’s large buying power could create incentives for economic operators not only to ensure full compliance with labor standards in the context of public contracting—but rather to change their entire corporate policy. This could create spillover effects for the entire private sector.

Beyond these straightforward considerations, there are other—more indirect—effects of the implementation of social criteria in public procurement (or, as Christopher McRudden put it, “Buying Social Justice”). These are more directly related to government paternalism, my area of study. By creating legal norms which require, or at least enable, public contracting authorities to incorporate social standards into procurement procedures, the government provides legal instruments for covering concrete purchasing needs in a socially responsible way. This legal function of social procurement rules is related to the aforementioned two aspects of “buying social responsibility.” At the same time, however, the government is introducing an ethical standard as to how a “good corporation” should or should not purchase its works, goods and services. Against this background, social procurement rules acquire a certain ethical function. They can begin to “educate” business entities and even private consumers, who may choose to buy ethically acceptable goods.

This pattern of educational paternalism should be distinguished from the more familiar forms of protective governmental paternalism (like restrictions on drinking or gambling or “data paternalism”), which aim at protecting citizens from certain consequences of their own action or inaction involving significant threats to their own rights and interests.

This distinction seems reasonable from a legal point of view. Protective governmental paternalism interferes with the individual’s right to personal autonomy and hence requires specific legal justification. In principle, it is up to me (and not the government) to decide whether or not certain conduct (drinking, gambling, disclosing personal data in social networks, etc.) is good or bad for me, even if this conduct comes with certain risks – provided that it is not posing threats to other people.

In contrast, ethical paternalism is typically related to conduct which does have an impact on other people. As noted above, asking for compliance with the International Labour Organization’s (ILO) core labor standards in public procurement procedures can actually improve the working conditions of the people involved in the manufacture and trade of the products to be procured.

Consequently, legal discussions about “socially responsible procurement” are not about whether or not this pattern complies with economic operators’ right to autonomy. Rather, the discussions in jurisprudence about social procurement concern the question of whether or not public procurement law (and law in general) is a suitable instrument for establishing ethical standards. Isn’t this something that the government should leave to society? Does the state have responsibility for the ethical well-being of its citizens and of society as a whole? 

The Risk of Overstretching the Law

Indeed, using certain fields of law as a tool of education bears the risk of alienating them from their original functions. The primary objectives of public procurement law, for example, are (1) effectively carrying out administrative tasks, (2) ensuring competition and equal treatment among economic operators, and (3) providing for sound management of public finances. Now, pursuing all kinds of secondary goals such as the promotion of corporate responsibility standards is certainly permissible, but it tends to conflict with the primary objectives. Prices increase, the balancing of the award criteria becomes more complex, the risk of opacity and discrimination rises, and the awards are more likely to be challenged in court.

In facing the risk of overstretching the law, the government should distinguish between more and less compulsory ethical rules. While compliance with essential labor standards contained in the ILO’s “Fundamental Conventions” such as the ban of hazardous child labor should certainly be a mandatory requirement in public procurement procedures, other requirements such as the payment of minimum wages, the employment of people from disadvantaged groups or the implementation of work/life balance initiatives seem to be less compulsory – as legitimate as they surely are! How should ethical standards be evaluated? Why are certain standards mandatory – and others not?

Of course, the discussion about which standards should or should not be mandatory is not necessarily a legal one. In fact, it may be a conversation that is tailor-made for the new discipline of Enhancing Life Studies (ELS). Developing the concept of (enhancing life through) socially responsible public procurement requires not only legal input but also careful reflections on ethics and economics. The interdisciplinary configuration of ELS provides a suitable arena for this conversation.

Photo courtesy of CIAT via Flickr.