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11 Jun 2021

European Coalition for Corporate Justice (ECCJ)

Statement by ECCJ: "German parliament adopts supply chain law, but compromise leaves gaps"

Today, the Bundestag adopted the Supply Chain Act, obliging companies to identify and account for their impact on human rights – such as forced and child labour, forced evictions, oil pollution and land grabbing – across overseas direct suppliers and, when necessary, also indirect suppliers.

The bill will enter into force in 2023, covering companies with 3,000 or more employees, and from 2024 onwards companies with more than 1,000 employees. 

Whilst the adopted law does contain some improvements for victims, the absence of new and improved civil liability rules for German companies perpetuates judicial uncertainty, condemning victims to costly and lengthy legal battles.

As such, the German law is out of step with the French duty of vigilance law and the European Parliament draft legislation, both of which do contain improved civil liability rules to help victims... 

Today’s vote was heavily influenced by corporate lobby groups, including Bund der deutschen Arbeitgeber (Confederation of German Employers) and Bund der Deutschen Industrie (Confederation of German Industry).

Ministers of Development and Labour, Gerd Müller (CSU) and Hubertus Heil (SPD), had originally proposed to include clauses strengthening civil liability; covering more companies; and extending obligations to the entire value chain, but the Ministry for Economic Affairs and many CDU members of parliament significantly weakened the text.

Less than one in five German companies monitor their foreign subsidiaries and contractors for human rights violations. In a 2020 survey, 75% of Germans supported the bill, including CDU/CSU voters. 

The European Commission is expected to release its own proposal for a Sustainable Corporate Governance directive in September 2021. This is also strongly supported by EU citizens, as demonstrated by the overwhelming response to the respective public consultation.

To be successful, the EU must provide affected individuals and communities with access to justice and effective remedy to hold corporations accountable when harm has occurred.