Friday February 12th 2021
Regulation later this year
Coalition agrees on supply chain law light
Larger German companies must ensure that foreign partner companies respect human rights in future, otherwise sanctions are threatened. Activists have long been pushing for such a supply chain law, but criticize the coalition's agreement as too half-hearted.
The grand coalition has come to an agreement after a tough struggle over the supply chain law. Federal Labor Minister Hubertus Heil announced it for this legislative period. He called the law a "historic breakthrough". The bill is due to be introduced to the cabinet this Friday. The originally required strict civil liability rules as well as the broad scope of application have been defused. It should also come into force in 2023.
Companies that violate human rights due diligence are threatened with sanctions. You can also be excluded from public contracts for up to three years, said the SPD politician Heil. To this end, a control authority is to receive a "robust mandate" to also check suppliers. The goal is to end child labor and environmental violations in countries of origin, said Development Minister Gerd Müller from the CSU.
According to Economics Minister Peter Altmaier, medium-sized companies should not fall under the scope of this law. It should apply to companies with more than 3000 employees from January 1, 2023. In 2024 it is to be extended to companies with more than 1000 employees.
Altmaier: "Take a look at the overall supply chain"
According to the agreement, a company must ensure that there are no human rights violations "in its area and its immediate suppliers," said Altmaier. The indirect supplier – such as a raw material supplier – is always relevant when a company becomes aware of violations, for example through a complaint or another way. Then it has to deal with the problem "in a simplified procedure", said the CDU politician. "Of course we look at the supply chain as a whole." Altmaier emphasized that with the law, Germany would also act as a role model for other countries.
The civil society alliance "Initiative Supply Chain Act" spoke of a "weakened" law. The compromise is an overdue step in the right direction. However, initially it only applies to a few companies and there is no civil liability of the companies, complained the initiative.
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