The debate on the repeal of the Supply Chain Act: What does it mean for businesses? | Scopewire

In this blog post, we will take a closer look at the current debate surrounding the repeal of the Supply Chain Act and analyze the impact on companies.

The current debate on the repeal of the Supply Chain Act and the impact on companies 

On 11.06.2024, the CDU/CSU parliamentary group submitted a bill to repeal the Supply Chain Act (LkSG) to the Bundestag  (https://www.bundestag.de/presse/hib/kurzmeldungen-1007886). The Bundestag dealt with this proposal on 14.06.2024. The CDU/CSU parliamentary group requested that the bill be immediately discussed for the second time without being referred to the committees. However, the required two-thirds majority for this motion was not achieved.

252 MPs voted in favor, 401 against (see: https://www.bundestag.de/parlament/plenum/abstimmung/abstimmung/?id=921). 
The LkSG therefore remains in force for the time being.

Justification of the Union

The Union justified its motion to repeal the LkSG by arguing that the European Supply Chain Directive (CSDDD) goes far beyond the German regulation. It therefore made no sense to expect companies to implement the LkSG and prepare for the CSDDD at the same time (see https://verfassungsblog.de/ein-schritt-vorwarts-keiner-zuruck/).

Analysis of the argumentation

However, this argument is questionable. It is true that the CSDDD goes beyond the LkSG by extending the scope of application to indirect suppliers and business partners from transportation, distribution and storage. However, the content of the due diligence obligations is very similar, as both regulations are based on the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, meaning that the implementation of the LkSG prepares companies for the CSDDD rather than distracting them from it (see https://verfassungsblog.de/ein-schritt-vorwarts-keiner-zuruck/). A repeal of the LkSG would hinder rather than promote the preparation process.

Conclusion

The debate on the repeal of the LkSG shows that the Union has misjudged the impact on companies. Retaining the law makes sense, as it prepares companies for the upcoming EU regulation. A repeal, on the other hand, would lead to uncertainty and make preparation more difficult.