Federal government agrees on supply chain law

The German government has decided to introduce a supply chain law. The skilled trades sector is skeptical and would prefer a European solution.

Strengthen human rights, stop exploitation. Under this heading, the Federal government still in this legislative period a national Supply Chain Act This is intended to make German companies responsible for ensuring that their entire supply chain no human rights violations occur.

The economic, Work and Ministry of Development have a comment on the proposed law Fact sheet The majority of trade takes place in supply chain networks of internationally operating companies. They benefit from work in other parts of the world, the paper states. take on in relation to human rights.

Voluntary commitment is not enough

It is also about fair competition"Everyone must follow the rules. Where voluntary commitment does not work, mandatory Rules." Because: According to a monitoring by the Federal Government, only a fifth All German companies with more than 500 employees adequately comply with their human rights due diligence obligations along their supply chains. Voluntary commitment is therefore not sufficient.

The law is to apply to companies from the beginning of 2023 with more than 3.000 employees This would affect around 650 companies in Germany. Just one year later, the limit is to be 1.000 employees  and more than 2.200 other companies will be required to comply. INDIRECT Many other companies are then affected, and as their suppliers they are also obliged to respect human rights.

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Operations management

The economy in the skilled trades is stagnating.

Reporting obligation should come

For all affected companies, a reporting obligation The relevant provisions are recognized human rights standardsEnvironmental concerns become important when they lead to human rights violations and when it comes to banning substances that are hazardous to humans and the environment. As soon as a company detects a violation in the supply chain, it has a duty to remedy the situation. Due diligence is intended to cover only the direct suppliers the first supplier level. This circle should only be expanded if specific complaints

"We guarantee its effective enforcement through a strong supervisory authority that keeps an eye on companies with on-site inspections and fines for violations – but also with substantial support offers," the ministries promise. Federal Office of Economics and Export ControlCompanies that are fined for violations should up to three years be excluded from public tenders. Civil liability is not planned.

European solution preferred

The Central Association of German Crafts (ZDH) rejects the national law and advocates for a "European regulation suitable for small and medium-sized businesses". From the ZDH's point of view, the legislative initiative comes at an inopportune time. In view of the corona pandemic and the associated challenges, there must be no new bureaucratic burdens for companies. Despite the limitation of the company size, there is a risk that "companies will extend their due diligence and reporting obligations to their supply chain pass on and thus also craft businesses increased bureaucratic burdens The Crafts Association expects that a draft bill for the law will now follow quickly, as it is to be passed during the current legislative period.