Germany’s Supply Chain Due Diligence Act

What has happened?

On June 11, 2021, the German Parliament passed the Supply Chain Due Diligence Act. With this law, the German government aims for greater protection of people and the environment in the global economy. As outlined by the federal government, German companies will face a range of obligations:

• Companies must ensure compliance with human rights regulations among their entire supply chain.
• They must set up appropriate preventative measures such as carrying out in-depth audits.
• The act also requires companies to publish their findings and measures in an annual report.

Starting in 2023, these obligations will apply to companies with a workforce of at least 3,000 and will be expanded to companies with a workforce of at least 1,000 by 2024.

What is the impact on German companies?

German companies especially need to address these requirements in their overseas activities. Having a risk management system to detect human rights or environmental law infringements is one key element. Further key questions for your company might be:

• Do we have full transparency of our suppliers which fall under the Supply Chain Due Diligence Act?
• How do we ensure that neither human rights nor environmental standards are infringed in our supply chain?

Is our risk management system strong enough to reduce liability and legal risks under the new act?

How can EAC support?

In the past years, EAC has helped various international companies in developing, verifying, and improving their local supply chain in Asia. Contact us for more detail or a first exchange on how we might be able to support you.