Germany Human Rights | Supply Chain Act comes into force

Many millions of people around the world suffer because they are paid far too little for their work and minimum social standards are disregarded. This includes, for example, the disregard of the ban on forced and child labor. Almost 80 million children worldwide work under exploitative conditions in textile factories, in mines, quarries or on plantations. Would you like to know how the federal government and German business are committed to maintaining minimum social standards? You can find answers here:

How does Germany support global social minimum standards?

One means of combating these inhumane conditions is the Supply Chain Act. From 2023, it will initially apply in Germany to companies with more than 3,000 employees. Its aim is to protect human rights in international supply chains. It obliges companies to respond to abuses when purchasing material from abroad. The law gives aid organizations and trade unions the opportunity to represent those affected in German courts in the event of violations.

To which companies does the Supply Chain Act apply?

The “Supply Chain Due Diligence Act”, as it is officially called, initially applies to companies with more than 3,000 employees. According to the Federal Minister for Economic Cooperation and Development (BMZ), Svenja Schulze, around 900 companies are affected. They are subject to different requirements, for their own business areas as well as for direct and indirect suppliers.

What does the Supply Chain Act mean for companies?

Basically, they must ensure that human rights are respected in their supply chains. Their duty of care extends to the entire supply chain – from raw materials to the finished product for sale. The requirements are graded, in particular according to the influence the companies have on the person responsible for the human rights violation and the different stages in the supply chain.

What do companies have to do according to the Supply Chain Act?

According to the BMZ, companies must, among other things, carry out a risk analysis, set up a risk management system and a complaints mechanism, and report on them publicly. If violations occur in their own business area or among direct suppliers, companies must take immediate action “to prevent, stop or minimize the extent of the violation.”

How is compliance with the Supply Chain Act verified?

The Federal Office for Economic Affairs and Export Control (BAFA) checks whether companies are complying with the law. It monitors company reports and investigates complaints. If BAFA finds any omissions or violations, it can impose fines or exclude companies from public contracts in Germany.

Does the Supply Chain Act also affect foreign companies in Germany?

Branches of foreign companies in Germany are also subject to the law. The decisive factor here is the number of employees in Germany; the same rules apply as for German companies.

What will change in the German Supply Chain Act in 2024?

From 2024, the law will also apply to companies with more than 1,000 employees. There are around 4,800 companies of this size in Germany. Small and medium-sized companies are not subject to the law.

How does the Supply Chain Act help people abroad?

Those affected by human rights violations abroad who work directly or indirectly for German companies or companies in Germany can continue to assert their rights in German courts. They can also file a complaint with the Federal Office of Economics and Export Control (BAFA). German trade unions and NGOs can support those affected from other countries in representing their rights in German courts.