CSO statement on the German draft bill for a Supply Chain Act
On March 3, 2021, the draft law "Act on Corporate Due Diligence in Supply Chains" ("Supply Chain Act") was adopted by the cabinet and then submitted to the Bundestag. The draft law introduces an urgently needed paradigm shift in Germany: away from purely voluntary corporate social responsibility to binding human rights and environmental requirements.
In its present form, however, the draft law has massive weaknesses and urgently needs to be improved: Under pressure from business associations, the Economic Council of the Christian Democratic Union (CDU), the Federal Minister of Economic Affairs and Energy (BMWi) and the Federal Chancellor, the scope of companies' due diligence obligations has been limited so that they now only apply in full to their own business operations and direct suppliers (contractual partners). The Supply Chain Act would thus undermine applicable international human rights standards of the United Nations and the OECD, according to which companies must respect human rights throughout the value chain.
From the perspective of the civil society actors who have joined forces to form the Initiative Lieferkettengesetz (Supply Chain Act Initiative), such a restriction is completely unacceptable. After all, most human rights violations take place at the beginning of supply chains - and thus risk not being covered by the law.
Equally problematic: Unlike the French Due Diligence Act (Loi de Vigilance) and current plans for EU regulation, the German draft law does not include a civil liability provision and only marginally incorporates environmental standards. In addition, under pressure from Federal Minister of Economics Altmaier the number of companies covered has been reduced by 60 percent compared to the original plans of Federal Ministers Heil and Müller.
In its current form, the German law would send the wrong signal internationally. The Initiative Lieferkettengesetz (Supply Chain Act Initiative) will therefore campaign for significant improvements in the coming weeks and months of parliamentary debate.