Too many companies still disregard minimum social standards - forced and child labor, exploitative working conditions and a lack of occupational safety are still usual, especially in the textile industry; millions of people live in hardship and misery as a result. Although companies are increasingly communicating their social responsibility, many fail to live up to it and not only cause enormous environmental damage within their global supply chains, but also violate fundamental human rights. Until now, there have been no consequences for this, but the German Act on Corporate Due Diligence in Supply Chains - the Supply Chain Act for short - is now set to put an end to this.

On June 11, 2021, the German Bundestag passed the Supply Chain Act as a binding framework for respecting human rights in supply chains. For the first time, companies will be required by law to assume responsibility for their transport chains, human rights and the environment. Furthermore, they have to ensure compliance with fundamental legal standards - the ordinance creates new requirements for corporate due diligence and thus increases security for those affected.
However, the law will not come into force until 2023 and will initially cover companies with 3000 or more employees. After 2024, the Supply Chain Act will also apply to companies with 1000 or more employees.

Responsibility for the entire supply chain

According to the new law, companies must ensure compliance with human rights along the entire supply chain. Considering that, a declaration respecting human rights is to be adopted, a risk analysis is to be carried out to identify adverse effects at direct suppliers and, if necessary, at indirect suppliers, and appropriate countermeasures are to be taken - companies must take action above all if there are clear indications of violations.

Better protection of human rights

In addition, companies are required to set up a complaints mechanism for human rights violations. To this end, affected parties can continue to assert their rights before German courts and can now also file complaints with the German Federal Office of Economic Affairs and Export Control.

External review and documentation requirement

From 2023, companies must also report transparently and publicly on their activities and they are obligated to document them to the Federal Office of Economic Affairs and Export Control. As an authority, they check compliance with the law, monitors company reports and investigate complaints submitted - in the event of omissions or violations, it can impose fines or exclude companies from public procurement.

Unfortunately, the original draft law was ultimately weakened in numerous parts - in addition to the limited validity based on company size, the due diligence obligations of companies also apply only to a limited extent. Initially, companies must mainly take care of their direct suppliers - however, many of these are located in Germany and therefore not where human rights violations increasingly occur. Usually, this primarily affects the beginning of the supply chain, where companies only have to intervene if they receive concrete indications of this. Furthermore, the law does not establish any civil liability, i.e. those affected by human rights violations cannot sue companies for damages on the basis of the law; there is no provision for civil liability on the part of German companies. Environmental standards are also not sufficiently addressed and only apply in specific cases.
So despite initial successes, the supply chain law that has been passed is still not enough - it still has too many weaknesses and can only be the start of protecting global human rights and the environment in the global supply chain. As a society and a company, we must continue to advocate for an even more effective, comprehensive supply chain law that applies across the board and continue to demand justice for those affected.