“Act on Corporate Due Diligence in Supply Chains” passed the German Parliament

The “Act on Corporate Due Diligence in Supply Chains” passed the German Parliament on June, 11th, 2021. It will enter into force in 2023 and will initially cover companies with 3,000 or more employees, and from 2024 onwards companies with 1,000 or more employees. The Due Diligence Act applies to all companies that have their head office or registered office in Germany. All temporary employees, as well as employees of all affiliated companies have to be taken into account in this calculation. These companies must identify risks of human rights violations and environmental destruction at direct suppliers and, if necessary, also at indirect suppliers. They must take countermeasures and document them to the Federal Office for Economic Affairs and Export Control (BAFA), which can issue fines if companies violate their due diligence obligations. Affected parties can demand that BAFA takes action.

Johanna Kusch, coordinator of the German civil society alliance “Initiative Lieferkettengesetz” commented: “In the fight against human rights violations and environmental destruction in supply chains, we are still far from reaching our goal, but as of today, we are finally at the starting line: for the first time, a law in this country obliges companies to take responsibility for the people in their supply chains. This is a success for civil society and good news for all those who work under exploitative conditions in the supply chains of German companies.” She adds, that the law covers too few companies and makes too many exceptions to the due diligence requirements. It does not improve the right to compensation for affected people and unfortunately does not set a sign for climate protection in supply chains. Therefore, this law is only a partial success. The Initiative Lieferkettengesetz promises: ”German Civil society will continue to fight for human rights and environmental protection in the entire value chain: For improvements in the Supply Chain Act, for an effective implementation and for a Europe-wide legislation that goes beyond the German law at crucial points.”