German draft supply chain law would increase companies' accountability to social, environmental standards

The German government has published a draft supply chain law intended to guarantee German companies' compliance with social and ecological standards at all stages of the value chain, including with foreign suppliers.

According to the draft law, if a German company becomes aware of a deficiency in the supply chain, it is legally required to remedy it. Companies would be fined in the event of human rights and environmental breaches and run the risk of being excluded from public tenders for up to three years.

German Development Minister Gerd Müller (CSU) and Minister for Employment Hubertus Heil (SPD) have long been pushing for legal regulation entailing minimum social end ecological standards for foreign supply chains. Minister of Economic Affairs, Peter Altmaier (CDU), however, had rejected these plans until now. With the newly published supply chain law, they have now agreed on a compromise. The proposed law would be a “signal for a just globalization”, Müller said.

Business and industry associations criticized the government’s draft law as a solo national effort and called for a comprehensive European supply chain law. While many supporters of the law, such as the development organizations Bread for the World and Misereor, said that the draft law would be an important first step, they criticized the lack of governing liabilities that would enable victims of human rights violations to claim indemnification.

Müller and Heil hope to see the supply chain law adopted in the current legislative period, by June 25, 2021.

News article – Deutschlandfunk (in German)

News article – Deutsche Welle