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Germany: Government agrees on mandatory due diligence law; Parliament to consider next

In December 2019, German Labour Minister Hubertus Heil and Development Minister Gerd Müller announced their intention to prepare key points of a mandatory due diligence law. 

According to Redaktionsnetzwerk Deutschland, the ministers were planning on presenting these on 10 March 2020, but were stopped by the Chancellery and the Ministry of Economics.

On 25 June 2020, German newspaper Handelsblatt first reported on the details of these unofficial draft key points.

At a press conference on 14 July, Federal Ministers Heil and Müller presented the results of a second quantitative survey assessing German companies' due diligence efforts in line with the German National Action Plan (NAP) on Business & Human Rights. Only 22% of the 455 companies that submitted a vaild survey response could show that they adequately meet the NAP requirements. Under the NAP, the Government has agreed to consider mandatory due diligence legislation if less than 50% of German companies with more than 500 employees introduce human rights protections by 2020. The current coalition agreement states that if companies’ voluntary implementation proves insufficient, the Government "will introduce appropriate legislation". As the results of the second survey show this to be the case, the Ministers stressed their aim is to adopt a law before the current election period ends in 2021. Civil society organisations and coalitions including Germanwatch and the 'Supply Chain Law Initiative' have called on the Federal Government and Chancellor Merkel to follow through. Minister Heil as well as NGO statements also maintained that an ambitious German law would give more credibility to Germany's efforts towards EU-level due diligence.

The three ministries involved - Labour, Development and Economics ministries - were unable to reach an agreement on key points, and particularly on the issue of liability, in time for the Cabinet to adopt them at the last meeting of the year 2020. Their adoption had initially been planned for August 2020 - according to the CSO coalition Initiative Lieferkettengesetz, Economics Minister Altmeier was blocking the process.

In early 2021, the issue was negotiated directly among Chancellor Merkel, Vice Chancellor Scholz and the relevant ministries.

Update: On 12 February 2021 it was announced that the relevant ministries have agreed on a legislative proposal, the final text of which is to be passed by the cabinet in March and then considered and voted in Parliament (Bundestag and Bundesrat) before the federal election in September. See below for more information on the proposal's contents. CSOs welcomed the agreement as an important and overdue step that adds momentum towards EU-wide legislation as well. However, groups have also called on German MPs to ensure the proposal is strengthened and due diligence requirements are UNGP-aligned.

More information is available in German here.

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