Easing of Supply Chain Act regulations - A sigh of relief for businesses - Relaxation of the supply chain law brings relief for businesses
The German federal cabinet has adopted a draft law known as the Supply Chain Act, which aims to ensure human rights standards in supply chains while avoiding double reporting obligations with EU legislation. The new Act, which came into effect in 2023, is a revision of the national Supply Chain Due Diligence Act.
The Supply Chain Act continues to focus on labor and environmental standards for products manufactured abroad for the German market, a goal set by the original Act. However, companies will have to submit fewer reports about compliance with these standards in their supply chains. This relaxation is based on plans from the coalition agreement on deregulation.
Federal Labour Minister Bรคrbel Bas, who supports the new regulations, assures that the regulation "in the fight against child labor and the protection from labor exploitation" will not be relaxed. She emphasized that the government will not relent in combating child and forced labor and protecting against labor exploitation despite the bureaucratic relief measures.
However, the decision has been met with criticism from various parties, including the Confederation of German Employers' Associations and human rights expert Armin Paasch of Misereor. Critics argue that the amendment to the Supply Chain Act is a violation of international law and a retreat in the protection of human rights in the economy.
The Greens accuse the black-red coalition of weakening existing supply chain rules. They claim that the relaxation of reporting requirements could lead to a decrease in companies' accountability for human rights violations in their supply chains.
Despite these criticisms, Labour Minister Barbara Bass (SPD) stressed that the abolition of the reporting requirement under the Supply Chain Due Diligence Act quickly implements the coalition agreement to further relieve companies. She also emphasized that violations of due diligence obligations will only be sanctioned in serious cases under the new Supply Chain Act.
The European Supply Chain Directive, a potential future law, could replace the national Supply Chain Due Diligence Act in Germany. Changes are currently being negotiated in the EU regarding this Directive. If implemented, it would standardize supply chain due diligence laws across the EU, potentially providing more clarity for companies operating in multiple EU countries.
In conclusion, the revised Supply Chain Act in Germany aims to strike a balance between reducing bureaucratic burden for companies and maintaining the fight against child and forced labor and the protection against labor exploitation. The debate surrounding this Act underscores the complexities of balancing economic needs with social responsibility.
