Act on Corporate Due Diligence Obligations in Supply Chains
15/08/2024, Gaziantep University, Turkey
In today's global trade system, especially in developing and third world countries, there are unfortunately very serious violations of environmental sensitivity or workers' social rights. Developed country companies that have supply relationships with businesses in these countries play a major role in this situation. Even if these companies do not commit serious violations in the countries where they are based due to the regulations they are subject to, they are largely responsible for the possible violations of the stakeholders of the supply chain they benefit from while producing or providing their services. Recently, however, there have been increased efforts to prevent such violations by leveraging the transformative power of advanced economies and global corporations.
The German Supply Chain Act is a regulation designed with the same transformative logic. Although this law, which is based on the Guiding Principles on Trade and Human Rights adopted by the United Nations Commission on Human Rights in 2011, covers only German companies as it is a national regulation, it is an important regulation that closely concerns foreign companies as it also holds companies responsible for the negativities in their supply chains.
The “Act on Corporate Due Diligence Obligations in Supply Chains”, commonly known as the German Supply Chain Act, entered into force on January 1st, 2023. It currently covers around 1,000 German companies with more than 3,000 employees, regardless of sector. However, as of January 1st, 2024, around 5000 German companies with more than 1,000 employees will also be subject to the obligations imposed by the law. The law imposes several obligations on companies to prevent potential human rights and environmental violations in their operations and supply chains.
The main objective of the German Supply Chain Act is to ensure that companies’ activities, both internally and within their supply chains, are executed in a manner that respects human rights and the environment. In this context, companies covered by the Act must respect social rights such as no forced labour or child labour, non-discrimination, freedom of association, occupational safety, and environmental rights arising from the Minamata (mercury), Stockholm (persistent organic pollutants) and Basel (hazardous waste) Conventions.
Bibliography:
Bundestag. (2021). Act on Corporate Due Diligence Obligations in Supply Chains of July 16 2021.
