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26 Feb 2021

Johanna Kusch and Claudia Saller, Social Europe

Commentary: Germany’s proposed supply chain law should provide for civil liability and align with international standards

"Germany’s proposed supply-chain law—a glass half-empty"

‘The strongest law in Europe.’ That’s what the federal minister of labour, Hubertus Heil, is calling Germany’s proposed legislation on supply chains (Lieferkettengesetz). Is he right?

Well, yes and no. The government plans to introduce a new duty of care for human rights. If approved by parliament, Germany will become only the second country with such a law...

...The draft law is a mixed blessing. Envisaged as taking effect in 2023, it would first apply to the country’s 600 largest companies and then, a year later, be expanded to around 2,900 companies with more than 1,000 employees. This is just half of what was initially suggested but the law would apply to more companies than the pioneering French duty-of-vigilance law.

At the press conference announcing the proposed law, all three relevant ministers—for development co-operation, labour and social affairs, and the economy—implicitly acknowledged that the goal should be to enhance judicial remedy for overseas victims.

But the lack of civil or criminal liability for corporations in the leaked draft text is bitter news for millions whose daily lives are affected by corporate abuse. Without such provisions, the proposal has no ‘stick’ to oblige corporations to prevent abuses, while providing a path to compensation claims by affected workers and other victims.

The proposal still has some teeth—but only a few. It promises to allow trade unions and civil society to file lawsuits against German companies, on behalf of those directly affected by their harmful and negligent behaviour.

If a company shirks its obligations, fines and sanctions could be levied against it of up to 10 per cent of annual turnover and it could face exclusion from public-procurement contracts for up to three years. Is this enough to finally break the cycle of destruction, destitution and impunity?...

...It’s now up to the German parliament to improve the law and add the missing pieces. If lawmakers are genuine about delivering real change, they will have to align the proposal with international standards, such as the United Nations Guiding Principles on Business and Human Rights or the Due Diligence Guidance for Responsible Business Conduct of the Organisation for Economic Co-operation and Development. It should provide for civil liability and extend its obligations to all companies.

As the European Commission embarks on drafting its own proposal, it will have to do some real soul-searching: does it want to protect unchecked corporate interests or to stand with people, nature and the climate?...