Committee launches Supply Chain Bill

According to the Bundestag, the Committee for Labour and Social Affairs approved the federal government’s draft bill for an amended version of the Supply Chain Act on 9 June 2021. The Act is to apply to companies with 3,000 employees starting in 2023 and to companies with 1,000 employees a year later. The organisation Deutsche Umwelthilfe is also calling for independent environmental due diligence requirements to apply to all companies with 250 or more employees and to smaller-scale companies in certain risk sectors.

As the Bundestag reported, on 9 June 2021 the Committee for Labour and Social Affairs approved the federal government’s draft bill for a Supply Chain Act  (19/28649) in an amended version. With the votes of the coalition parliamentary groups CDU/CSU and SPD as well as the parliamentary group Bündnis 90/The Greens, the body approved the bill, while the parliamentary groups of AfD and FDP voted against it and the parliamentary group Die Linke abstained. Various amendments from the Left and the Greens were also put to the vote but failed to receive a majority.

With this Act, the federal government wants to oblige companies to comply with human rights standards in all their global production facilities. The responsibility of businesses is to extend to include the entire supply chain, graded according to the influence they can exert. The obligations are to be implemented by the companies in their own fields of activity as well as towards their direct suppliers. Indirect suppliers should be included as soon as the company has substantial knowledge of human rights violations at that level. Companies will be required to conduct a human rights risk analysis, take preventive and remedial action, establish grievance mechanisms and report on their activities. The Act is to apply to companies with 3,000 employees starting in 2023 and to companies with 1,000 employees a year later.

The scope of the Act was amended to the effect that foreign companies with branch offices or subsidiaries in Germany are now also included. The number of employees includes those employees posted abroad. It was also clarified that companies cannot be held liable for human rights violations under civil law beyond the existing regulations already in place. Environmental protection concerns have been extended to include aspects of waste management.

The organisation Deutsche Umwelthilfe (DUH) assesses the Supply Chain Act as disappointing for environmental and climate protection: “[…] Specifically, the DUH demands comprehensive and independent environmental due diligence obligations in the form of a damage and environmental good-related general clause that protects the natural functions of such environmental assets as soil, air, water, climate and biodiversity. After all, there are direct and indirect impairments of biodiversity, soil, water and climate that are not directly associated with individualisable human rights violations. It is also important for the independent environmental due diligence requirements to apply to all businesses with 250 or more employees and to smaller-scale companies engaged  in certain risk sectors. […]”

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