Marcel Engel joined the UN Global Compact Network Germany as Executive Director in 2016. The network includes some 1300 participants, including more than 1200 companies as well as representatives from civil society, academia and government. The Network aims to support companies in acting responsibly along the 10 Principles of the Global Compact (on human rights, labor rights, environment and anti-corruption) and in contributing to the Sustainable Development Goals of the United Nations. It does so by offering a range of capacity building and exchange programs targeted to companies at different size and knowledge.
Between 1997 and 2014 Marcel worked in various senior-level positions at the World Business Council
for Sustainable Development (WBCSD). His earlier professional experience includes an engagement as professional officer at the United Nations Industrial Development Organization (UNIDO) in Mexico between 1994 and 1996. Marcel holds degrees in international relations and development studies from the University of
Constance and The London School of Economics, as well as Swiss Hotel Management diploma.
Marcel Engel will be among the participants in the conference “Sustainable Future: Innovations for Decarbonization,” organized by the UN Global Compact in Bulgaria and the German-Bulgarian Chamber of Industry and Commerce with the support of Aurubis Bulgaria. See what he shared with ESGnews.bg before his arrival in Bulgaria:
Mr. Engel, how do you see the role of the German network in driving sustainable business practices, especially in a major industrial economy like Germany?
Our role is to support companies in acting responsibly along the lines of the Ten Principles on human rights, labor rights, environmental protection, and the prevention of corruption.
As an initiative of the UN Secretary General of the United Nations, we also have the mandate to promote the essential contribution of the private sector to the implementation of the 2030 Agenda and its Sustainable Development Goals (SDGs).
What are some key challenges that German companies face in aligning with the principles of the UN Global Compact, and how does your network, that include more than 1300 companies, help them overcome these challenges?
Our members include the leading German multinational enterprises of the DAX, dynamic mid-sized companies from the so-called “Mittelstand” as well as a lots of SMEs. Obviously, their resources and capacity to address sustainability challenges and opportunities greatly varies.
We try to cater to their specific needs by providing tailor-made support. For smaller companies this primarily includes practical backing in form of guidelines or webinars, for mid-sized companies trainings and other capacity building measures, and for larger companies peer learning opportunities as well as the chance to constructively interact and cooperate with civil society organization and the government.
How do you foster deeper engagement from the private sector, particularly small and medium-sized enterprises, in the sustainability agenda?
As indicated, SMEs have fewer resources than larger companies to address sustainability issues. You therefore need to be very hands on to cater to the specific needs of SMEs. It is also important to focus on the business case and to avoid sustainability jargon.
We have produced a lot of handbooks and materials to introduce SMEs to the areas we are working on, explain them why this issues are of relevance to their operations and providing them support in implementing specific sustainability measures, such as by guiding them through the five steps in implementing a human rights due diligence system, creating a greenhouse gas emission balance, an anti-corruption compliance system or a first environmental report.
To engage SMEs we also cooperate with business chambers and associations, which can act as important multipliers in reaching out to a wider community of smaller companies.
Germany has adopted a law from 1 January 2023 on sustainability reporting, which includes supply chain risk management system. How German companies are dealing with this challenge?
The German Act on Corporate Due Diligence Obligations in Supply Chains (LKSG) aims at improving respect for human rights and environmental standards in global supply chains. It originally required companies with a headquarters or a subsidiary in Germany and more than 3,000 employees to implement due diligence obligations in their own business operations and along their supply chains. As of 2024, the scope expanded to include all companies with more than 1,000 employees.
The law stipulates that companies must meet certain due diligence requirements, including the establishment of a risk management system to identify, prevent or minimize the risks of human rights violations and damage to the environment. The Act outlines the necessary preventive and remedial measures, makes complaint procedures mandatory and requires regular reporting.
The due diligence obligations apply to an enterprise’s own business area, as well as to the actions of a contractual partner and other (indirect) suppliers. This means that an enterprise’s responsibility no longer ends at its own factory gate but applies along the entire supply chain.
How do you see corporate accountability evolving in the coming years, particularly in light of new regulations like the Corporate Sustainability Due Diligence Directive (CSDDD) in Europe?
The CSDDD should give corporate human rights due diligence a growing momentum and help leveling the playing for companies across Europe. This should be in the interest of German companies, which already must comply with previously mentioned German Act that is closely aligned with the CSDDD.
Having said so, many companies are increasingly struggling in meeting the multiple reporting requirements coming forward, particularly the smaller ones. Companies are complaining that a growing amount of resources is going into reporting and compliance obligations, which then might be missing for investments into the actual transformation processes. There are also complaints that bureaucracy is stifling innovation and putting European companies at competitive disadvantage.
While I believe that regulations are essential to advance on the sustainability agenda, there is certainly scope for more harmonizing the reporting thereby reducing the burden on companies. At the end of the day, we should strive for unified global environmental reporting standards along the lines of what we have for financial sector. Harmonized European standards could be an important milestone in such a process.
As ESG principles become mainstream in Germany, where do you see the greatest opportunities for innovation in business practices? Are there specific sectors that are leading or lagging behind?
Mainstreaming sustainability is increasingly becoming essential to better manage risks in these turbulent times of geopolitical polarization, as well as to take advantage of new business opportunities. To give you a few a few examples:
In Germany, the switch to cleaner energy sources is not only essential to live up to our international commitments to combat climate change, but also to help us reduce our dependance from fossil fuels previously supplied by now adversarial countries. In addition, this switch is a major source for innovation and development for renewable energy producers and suppliers.
The above-mentioned human rights due diligence act has not only contributed to prevent infringements, it has also helped German companies to better understand the risks in their global supply companies.
Building on the latter, investing in circular economy innovations is helping resource intensive companies becoming less reliant on essential raw materials imports in times of growingly fragile and less reliable global supply chains.
But yes, it is true that certain sectors have been lagging in embracing sustainable transformations – very much to their detriment. The probably most prominent example is the formerly much admired German automotive industry, which is struggling to comply with the EU´s emission reduction targets, risking high fines, while at the same time losing market share in the rapidly growing e-mobility sector to companies across the Atlantic and in the that Far East that have had been quicker in embarking on this transformation path.
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