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The new Supply Chain Act from 2023
In 2021, the German government decided that a new supply chain law would come into force from 2023. This law is intended to ensure that wherever a company is active, care must be taken to ensure that there are no human rights violations or environmental pollution. If this is not the case, companies will have to pay heavy fines and will be held liable for human rights violations. This was not previously the case, which is why it was accepted. The new law is intended to change this.
This could lead to problems for German companies that are also active in other countries, as human rights are not respected in all countries. They should therefore be even more careful than before when choosing their business partners. They should also pay attention to the supply chain law when working with Chinese partners, as unfortunately some companies there are guilty of human rights violations, such as child labor, forced labor, inadequate occupational safety and exploitation. In certain Chinese regions in particular, where there are major human rights violations against ethnic minorities, this is also the case in the factories. German companies should also pay attention to the environmental impact, as some manufacturers do not dispose of their waste properly, for example. In many textile factories, for example, chemical dyes are discharged into nearby rivers. Compliance with certain environmental standards is therefore also an important part of the new law. Compliance with the Supply Chain Act is monitored by the Federal Office of Economics and Export Control, and violations can result in fines or companies being excluded from public procurement. This new supply chain law is intended to remind German companies of their corporate duty of care so that they can better fulfill their global responsibility to respect human rights and environmental standards.
Initially, the Supply Chain Act will come into force for companies with more than 3,000 employees, and from 2024 it will also come into force for companies with 1,000 employees. It is assumed that smaller companies will also have to comply with the law in the long term. The EU is even calling for an import ban on products associated with human rights violations in the future. However, it is still unclear whether and, if so, when this law will come into force.
