Initially unveiled on 12 February 2021 by the three Federal Ministers for Employment, Cooperation and the Economy (c.f. article No.12360), Germany’s bill on due diligence in supply chains was adopted by the Council of Ministers on 03 March, about three weeks earlier than expected. This law will require companies headquartered in Germany to ensure that human rights (including ILO fundamental conventions) are respected along their supply chains. Companies will have to apply higher standards to their direct suppliers than those to their indirect suppliers. The bill now contains both a financial penalties scale and total penalty amounts intended for infringements of the legislation. The Bundestag is expected to pass the draft legislation before the parliamentary elections are held in September, and it should come into force on 01 January 2023.
Distinction drawn between ‘direct supplier’ and ‘indirect supplier.’ The law will initially apply to companies with at least 3,000 employees before being extended to cover companies with at least 1,000 workers as of 01 January 2024. The bill distinguishes between ‘direct suppliers’ and ‘indirect suppliers.’ In the ‘direct supplier’ case companies will have to be proactive, and in particular, they will have to conduct risk analyses, adopt risk prevention measures, set up complaint procedures, and communicate their policies so as to prevent infringements (in particular their purchasing policies).
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