Germany Latest EU Country to Introduce Due Diligence Rules


Reading time ( words)

On 11 June 2021, the German Supply Chain Act was adopted by the German Parliament by a large majority, introducing binding human rights and environmental due diligence obligations for companies. After lengthy and difficult negotiations, the political groups found compromises on several key aspects of the law ranging from the scope of companies covered to the question of liability. The aim of the law is to foster responsible business conduct and remove illicit practices such as child labour from supply chains.

Once formally signed, the law will require large German companies as well as foreign companies with branches in Germany to identify and address human rights and certain environmental risks in their own as well as in their direct suppliers’ operations. While the due diligence obligation is limited to direct suppliers, companies will have to take measures if they are made aware of potential abuses in any part of their supply chain, for example via a complaint. Companies will have to regularly conduct a risk assessment, implement preventive measures where needed and annually report on their due diligence processes. 

The due diligence duty builds on the UN Guiding Principles on Business and Human Rights. Its thematic scope encompasses human rights and labor rights as expressed in ILO conventions as well as the following environmental conventions:

  • The Minamata Convention on Mercury
  • The Stockholm Convention on Persistent Organic Pollutants
  • The Basel Convention on the Control of Transboundary Movements of Hazardous Waste

In case of violations, companies will face administrative fines of up to 800 000 EUR or two percent of annual revenue and potential exclusion from public procurement for up to three years. 

The German Supply Chain Act does not create a liability regime for companies – an important aspect that was clarified in the political negotiations. It does, however, enable trade unions and NGOs to initiate legal proceedings against companies on behalf of victims. 

The law will be implemented in two phases: from January 2023, companies with more than 3 000 employees will have to abide by the new rules; and as of January 2024 the threshold will be lowered to companies with more than 1 000 employees. 

For Germany, the law presents a paradigm shift, away from voluntary CSR initiatives towards binding due diligence obligations. Several other Member States already have due diligence laws in place or are contemplating introducing such laws. In parallel, the pending EU proposal on Sustainable Corporate Governance (SCG) and Due Diligence legislation is expected in the second half of this year. With this pending proposal, the European Commission aims to create legal certainty across the Union by introducing a harmonized set of rules applicable across Member States.

IPC continues to engage with policymakers on this topic to advocate on behalf of the electronics industry for a framework that is feasible and workable for industry while protecting human rights and the environment. 

Share




Suggested Items

I-Connect007 Editor’s Choice: Five Must-Reads for the Week

09/23/2022 | Andy Shaughnessy, Design007 Magazine
It’s officially fall now, and in Atlanta the temperature has plummeted to the mid-80s. We’ve all bumped our air conditioners up to 74 degrees. That means it’s trade show season, and I’ve been busy looking for my suitcase. This week, we have an assortment of news about associations, education, and advocacy, as well as another installment of our Printed Electronics Roundtable. And if you’re looking for a job, you are in luck; our jobConnect007 section is chock-full of open positions at all levels in this industry.

IPC: Companies Are Intentional About Tracking Environmental and Social Risks

09/22/2022 | Suhani Chitalia and Kelly Scanlon, IPC
Leading companies in the electronics manufacturing industry are highly intentional about their environmental, social and governance (ESG) priorities, with climate change and energy use among the most closely scrutinized issues, an IPC analysis shows. As part of IPC’s ESG for Electronics initiative, IPC is interested in developing resources for members on the most common ESG methods and priorities of leading companies across the electronics value chain. In support of this, IPC has preliminarily analyzed the ESG reports of approximately a dozen companies in selected portions of the industry.

EIPC Technical Snapshot: Novel Laser-based Manufacturing Processes in Automotive Electronics

09/22/2022 | Pete Starkey, I-Connect007
“Summer is over, now it's back to work!” This was the opening line of the invitation to the 18th EIPC Technical Snapshot webinar, Sept. 14, following the theme of advances in automotive electronics technology, introduced and moderated by EIPC President Alun Morgan. The first presentation, entitled "The fully printed smart component—combining additive manufacturing and sensor printing," came from Jonas Mertin, a thin-film processing specialist at the Fraunhofer Institute for Laser Technology.



Copyright © 2022 I-Connect007. All rights reserved.