The Act on Corporate Due Diligence Obligations in Supply Chains (Gesetz über die unternehmerischen Sorgfaltspflichten in Lieferketten) came into force on 1 January 2023. The law regulates the responsibility of German enterprises to respect human rights in global supply chains. This includes, for example, protection against child labour, the right to fair wages, as well as environmental protection. The people in the supply chains, enterprises and consumers benefit from this.
Supply Chain Act
Act on Corporate Due Diligence Obligations in Supply Chains
The Supply Chain Act at a glance
1. What does the Supply Chain Act regulate?
The law strengthens human rights and environmental protection in global supply chains. It obligates companies in Germany to respect human rights by implementing defined due diligence obligations. These obligations apply to their own business area, the actions of their contracting partners and the actions of other (indirect) suppliers. This means that the responsibility of companies no longer ends at their own factory gate, but extends throughout the entire supply chain.
Initially, companies must identify, assess, and prioritize the risks in their supply chains. Based on the results, companies publish a policy statement and take measures to prevent or minimize violations of human rights and damages to the environment. The law sets out what preventive and remedial measures are necessary. Other obligations include establishing channels for complaints from people in the supply chains and a regular documentation and reporting on supply chain management.
This benefits the people in the supply chains, companies, and consumers. Due to this law, they have legal certainty and a reliable basis for a sustainable supply chain management with resilient procurement routes. The Supply Chain Act also provides consumers with the assurance that in particular large companies in Germany now have to focus even more strongly on fair production.
2. To whom does the Supply Chain Act apply?
The law initially applies to companies with at least 3,000 employees starting in January 2023, and from 2024 to companies with at least 1,000 employees in Germany.
3. Which human rights does the Supply Chain Act strengthen?
Das Gesetz stärkt Menschenrechte und den Umweltschutz. Dazu zählen unter anderem:
The law strengthens human rights and environmental protection. That includes:
- protection against child labour, forced labour, and discrimination,
- protection against land grabbing,
- occupational health and safety,
- the right to fair wages,
- the right to form unions,
- protection against environmental violations.
Further information: CSR - Supply Chain Act (csr-in-deutschland.de)
Corporate Social Responsibility
Companies can make a major contribution to the realisation of decent work worldwide. As part of its CSR strategy, the Federal Government helps companies to rise to their responsibility.
EU supply chain law initiative
In a globalized economy, it takes a European strategy to protect human rights and the environment in supply and value chains effectively.
National Action Plan (NAP)
With the National Action Plan for Business and Human Rights (NAP) the Federal Government sets out the responsibilities of German companies along supply and value chains.