The aim of the law is to improve the protection of human rights in global supply chains.
To implement this, the German government passed a draft law in June 2021 with the official name Supply Chain Sourcing Obligations Act, which came into force in January 2023.
The law affects the following German companies:
> As of 2023: Companies with more than 3,000 employees (incl. subsidiaries) in Germany.
> From 2024: companies with more than 1,000 employees in Germany.
The German Federal Ministry for Economic Cooperation and Development explains the goal of the law as follows: “The aim is to improve the protection of human rights in global supply chains. The aim is not to implement German social standards everywhere in the world, but to ensure compliance with fundamental human rights standards such as the ban on child labor and forced labor. Companies in Germany also bear responsibility for this. They must ensure that human rights are respected in their supply chains. The law sets out clear and implementable requirements for companies’ due diligence obligations, thus creating legal certainty for companies and those affected.”
The key rules of the law:
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clear requirements for companies
For the first time, there are clear requirements for corporate due diligence in order to create legal certainty for companies and those affected.
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responsibility along the entire supply chain
From raw material to finished sales product, corporate due diligence requirements now extend along the entire supply chain. Depending on their ability to influence the perpetrator of the human rights violation and their position in the supply chain, the requirements for companies are graduated. If there are clear indications of violations, companies must take action.
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external verification by an authority
With the Federal Office of Economics and Export Control, an established authority verifies compliance with the law.
It checks company reports and investigates complaints submitted. If it finds omissions or violations, it can impose fines or exclude companies from public procurement.
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Improved protection of human rights
Individuals affected by human rights violations can continue to assert their rights before German courts. In addition, it is now also possible to file a complaint with the Federal Office of Economics and Export Control.
Further information and the full text of the law can be found here: www.bmz.de/de/themen/lieferkettengesetz
Do you still have questions? At the 4th BME Forum “Update Supply Chain Act”, practitioners will discuss their measures in organization, supplier and risk management as well as sustainability in order to meet the requirements of the Act.
Register now: www.bme.de/veranstaltungen/grossveranstaltungen/update-lieferkettengesetz/
The next goal: A uniform regulation for the entire EU.
To strengthen these efforts as much as possible, there is already an initiative to introduce a law at EU level.
The EU Supply Chain Act offers the chance to make a real difference in the world’s third-largest economic area and to sustainably improve the protection of human rights and the environment.
The Supply Chain Law initiative describes its plan as follows: “Protection of human rights and global sustainable development: the European Union is committed to contributing to these goals. In the face of current crises, these goals are more important than ever. But far too often, European companies stand for the opposite: with unscrupulous business practices, they contribute significantly to dangerous working conditions, exploitative child labor and destroyed rainforests around the world. Far too often, people and the environment have to pay for the profits of corporations from Europe.
It is time for Europe to take responsibility and pass an effective EU supply chain law: This is how Europe can make a real difference for our planet and its people.”
Read more about the initiative here: www.lieferkettengesetz.de
Sources
Cf. Initiative Lieferkettengesetz.de, accessed 03.02.2023
URL: https://lieferkettengesetz.de/
Cf. Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung , accessed 03.02.2023
URL: https://www.bmz.de/de/themen/lieferkettengesetz