In the waning days of the illustrious tenure of Angela Merkel, a German and global leader, the German Parliament recently passed the Supply Chain Due Diligence Act (June 2021).
Germany occupies an important space in the global firmament of nations for a number of reasons, including the size and sophistication of its export-driven national economy. Developments emanating from Germany, such as the Supply Chain Act, are worthy of our close attention and appropriate application. The Supply Chain Act represents a German effort to clarify the legal responsibilities of corporations in protecting human rights and the environment.
The Act requires that corporations must make reasonable efforts to ensure there are no violations of human rights: (1) in their own business operations; and (2) in their direct and indirect supply chains, both at home and abroad. The requirements imposed on corporations, as well as the enforcement process and non-compliance consequences, are all dealt with in the Act.
Starting January 1, 2023, companies with at least 3000 employees that have their head office, administrative seat or statutory seat in Germany, and companies that have a branch employing at least 3000 in Germany must abide by this Act. As of January 1, 2024, this threshold will be reduced to 1000 employees.
In our unfolding world of recovery from the destructive pandemic, the German legislative precedent is a must read.
Next up – the entire 27 member EU.