Find out more about the current compliance requirements in the German Supply Chain Act and their impact on companies.
Background to the German Supply Chain Act
The German Supply Chain Act was introduced to strengthen the responsibility of companies for their supply chains. It aims to prevent human rights violations, environmental pollution and other negative impacts along the supply chain.
The law was originally passed in 2021 and aims to oblige companies to comply with human rights and environmental standards along their supply chain. It affects companies with more than 3,000 employees in Germany and is intended to ensure that they take responsibility for their suppliers.
The introduction of the Supply Chain Act is part of a global movement to promote responsible business practices. It follows similar laws that have already been passed in other countries such as France, the Netherlands and the UK.
Updating the compliance requirements
The German Supply Chain Act is being updated to tighten the compliance requirements for companies. The updated requirements aim to ensure that companies are even more aware of their responsibilities along the supply chain.
The update includes stricter regulations for monitoring and reporting on human rights and environmental standards. Companies must prove that they have taken measures to ensure that their suppliers comply with the required standards.
In addition, the fines for companies that violate the compliance requirements will be increased. This is to ensure that companies take compliance with the standards seriously and take appropriate measures to prevent potential violations.
Obligations for companies
The German Supply Chain Act sets out clear obligations for companies to ensure that they manage their supply chains responsibly. This includes the obligation to comply with human rights and environmental standards along the entire supply chain.
Companies must carry out regular risk analyses to identify potential risks of human rights violations and environmental pollution in their supply chain. Based on these analyses, they must take appropriate measures to minimize or eliminate these risks.
In addition, companies must report transparently on their supply chain and ensure that their suppliers comply with the required standards. They must also set up grievance mechanisms for affected parties and respond appropriately to complaints.
Effects on supply chains
The German Supply Chain Act has a significant impact on supply chains, especially on companies and their suppliers. Companies must ensure that their suppliers comply with the required human rights and environmental standards in order to avoid legal consequences.
This requires intensive monitoring of the supply chain and working with suppliers to ensure that they take the necessary measures to comply with standards. Companies may have to change their suppliers if they are unable to meet the requirements.
However, the impact of the Supply Chain Act goes beyond the legal consequences. Companies that take their responsibility along the supply chain seriously can improve their reputation with customers, investors and the public. They can position themselves as responsible companies that are committed to human rights and environmental protection.
Measures for compliance with the requirements
In order to meet the compliance requirements of the German Supply Chain Act, companies must take various measures. These include carrying out regular risk analyses along the supply chain to identify potential risks of human rights violations and environmental pollution.
Based on these analyses, companies must take appropriate measures to minimize or eliminate these risks. This can include setting up training programs for employees, working with suppliers to improve working conditions or promoting sustainable practices.
In addition, companies must report transparently on their supply chain and ensure that their suppliers comply with the required standards. They should also establish grievance mechanisms for affected parties and respond appropriately to complaints to address potential violations.
