Earlier today (11 June 2021), the German parliament adopted the Supply Chain Act. The law enforces organizations to bear responsibility for human rights violations within their supply chains.
Specifically, businesses will be asked to identify and account for their impact on human rights — such as child and forced labor, forced evictions, petroleum contamination, and property grabbing — across foreign suppliers.
The legislation will come into play on 1 January 2023 for businesses with 3,000 or more workers. By 2024 onwards, the Supply Chain Act will also be applicable to companies with more than 1,000 workers.
Violations of this new law might produce a maximum fine liability of 8m or 2 percent of their company’s average yearly turnover. Companies which don’t comply can be deducted from public tenders.
For and against
The adoption is mostly termed a step in the ideal direction. The European Coalition for Corporate Justice (ECCJ), by way of instance, which signifies a 250-powerful cohort made up of NGOs, trade unions, consumer organisations and professors, believes the law is’a good start’.
“This law ends decades of German politicians wilfully giving business a carte blanche to abuse people and the planet with impunity,” stated ECCJ manager Claudia Saller.
The European Center for Constitutional and Human Rights (ECCHR) similarly explained the law as a positive measure. “For decades, German companies have profited at the expense of people and the environment,” said manager of ECCHR’s Business and Human Rights programme, Miriam Saage-Maaß.
“That a due diligence law was finally passed today is an important and long overdue step. Voluntary social standards have failed… With the due diligence law, the German government is finally making human rights and environmental protection mandatory for companies.”
Environmental NGO Fern also commended the law’s recognition that human rights abuses’go hand in hand’ with illegal deforestation.
In the lead up to the parliamentary vote, but not all were in favour. The German-African Business Association told Germany’s international broadcaster Deutsche Welle (DW) that it wasn’t in favour.
“We think it’s wrong to respond to a global problem with a national law. This doesn’t change the global human rights situation,” said business body CEO Christoph Kannengiesser.
“All it does, is create additional competitive disadvantages for our own companies here [in Germany] which are global leaders in terms of their standards.”
A’timid law’ for larger businesses just?
While NGOs are mostly in favour of due diligence legislation across human rights and environmental balls, many are disappointed with the final version of Germany’s Supply Chain Act.
Fern argues the new law’s measures fail to adequately address human rights abuses and illegal deforestation. “By restricting companies’ due diligence obligations to its own business operations and direct suppliers, but not to direct suppliers, it does not take into account the complex global supply chains, and won’t influence them,” Fern’s Sustainable Consumption and Production Campaigner Nicole Polsterer told FoodNavigator.
The environmental NGO also raised concerns that Germany’s stance is not tough enough, especially given the timing of the law in a European context. The European Commission is preparing to table its own environmental and human rights due diligence law later this year.
“By adopting a shy law, Germany has failed to show leadership in the wake of two recent EU legislative proposals to an EU regulation expected this autumn. Germany’s law Shouldn’t Be Regarded as a template for a future EU law because it applies to large