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German parliament adopts supply chain law, but compromise leaves gaps
Brussels, 11 June 2021 — Today, the Bundestag adopted the Supply Chain Act, obliging companies to identify and account for their impact on human rights – such as forced and child labour, forced evictions, oil pollution and land grabbing – across overseas direct suppliers and, when necessary, also indirect suppliers.
The bill will enter into force in 2023, covering companies with 3,000 or more employees, and from 2024 onwards companies with more than 1,000 employees.
Whilst the adopted law does contain some improvements for victims, the absence of new and improved civil liability rules for German companies perpetuates judicial uncertainty, condemning victims to costly and lengthy legal battles.
As such, the German law is out of step with the French duty of vigilance law and the European Parliament draft legislation, both of which do contain improved civil liability rules to help victims.
This law ends decades of German politicians wilfully giving business a carte blanche to abuse people and the planet with impunity. It’s a good start, but victims deserve more. They must have easy access to German courts for human rights violations by German companies. There should be no gaps or loopholes letting companies off the hook for fatal textile factory fires in Pakistan or dam breakages in Brazil.
Claudia Saller, Director of the European Coalition for Corporate Justice
Today’s vote was heavily influenced by corporate lobby groups, including Bund der deutschen Arbeitgeber (Confederation of German Employers) and Bund der Deutschen Industrie (Confederation of German Industry).
Ministers of Development and Labour, Gerd Müller (CSU) and Hubertus Heil (SPD), had originally proposed to include clauses strengthening civil liability; covering more companies; and extending obligations to the entire value chain, but the Ministry for Economic Affairs and many CDU members of parliament significantly weakened the text.
Less than one in five German companies monitor their foreign subsidiaries and contractors for human rights violations. In a 2020 survey, 75% of Germans supported the bill, including CDU/CSU voters.
The European Commission is expected to release its own proposal for a Sustainable Corporate Governance directive in September 2021. This is also strongly supported by EU citizens, as demonstrated by the overwhelming response to the respective public consultation.
To be successful, the EU must provide affected individuals and communities with access to justice and effective remedy to hold corporations accountable when harm has occurred.
Contacts:
Policy Officer: Christopher Patz, christopher.patz@corporatejustice.org
Communications Officer: Iva Petkovic, iva.petkovic@corporatejustice.org
For breaking news and comment on EU affairs: https://twitter.com/ECCJcorpjust
Notes to editors:
- Briefing on corporate lobbying that took place prior to the draft bill. Briefing on corporate lobbying after the presentation of the draft law.
- An analysis by Initiative Lieferkettengesetz of what the new law can do – and where it fails to deliver justice and legal clarity.
- Statement by civil society on the German supply chain law, co-signed by ECCJ, Amnesty International, Friends of the Earth Europe and 5 other leading European NGOs.
- One prominent civil liability case against a German company: the lawsuit against KiK over Pakistan factory fire (pages 11-13). Victims sought justice in the European courts, but failed due to the fact that Pakistani law was applied.
- For a comparison of the different corporate due diligence laws or legislative proposals at the national level in Europe, see our comparative table.
- ECCJ advocates for effective EU legislation to include these key elements.
- Civil society briefing on why and how environmental protection must be integrated into companies’ due diligence requirements.
The European Coalition for Corporate Justice (ECCJ) is a coalition of over 480 civil society organisations in Europe advocating for laws that guarantee corporate accountability and transparency, and ensure justice for people affected by corporate malpractice.
ECCJ members CorA Netzwerk für Corporate Accountability and Germanwatch e.V. have been campaigning for a strong supply chain law in Germany since September 2019 as part of Initiative Lieferkettengesetz.
EU Transparency Register: 48872621093-60
Photo by Micha Deutschland e.V./Initiative Lieferkettengesetz.
