Human Rights: The EU supply chain law is coming: What this means

Human Rights: The EU supply chain law is coming: What this means

There is already a German supply chain law – the EU version is even stricter. The federal government does not support the plan, but that has not stopped the new rules.

There was a long struggle – now the EU states have finally adopted the European supply chain law. There were no dissenting votes in the final vote in Brussels – however, Germany and nine other countries abstained, according to official information from the EU Council of Ministers.

The text of the law only needs to be published in the EU Official Journal to come into force. After that, the EU states have a good two years to implement the new rules into national law. The project and its effects at a glance:

What is the aim of the EU Supply Chain Law?

The aim of the EU supply chain law is to strengthen human rights worldwide. Large companies should be held accountable if they profit from human rights violations such as child or forced labor. They should also draw up a plan aimed at ensuring that their business model is compatible with the goal of limiting global warming to 1.5 degrees compared to pre-industrial times.

According to the EU Parliament, affected companies must obtain contractual assurances from their suppliers. If necessary, they must also support small and medium-sized companies with which they do business so that they can meet the new obligations.

What does the law mean for consumers?

Jochen Geilenkirchen, the speaker for sustainable consumption at the German Consumer Organisation (vzbv), sees the EU supply chain law as a relief for consumers. “It makes those who can really ensure sustainable products in the supermarket responsible: the companies,” he emphasised. Consumers cannot correct what goes wrong in the supply chain through their purchasing decisions anyway.

A report by the Scientific Advisory Board at the Federal Ministry of Food and Agriculture has shown that the expected cost increases due to the EU Supply Chain Act are manageable. In addition, according to the report, it is less likely that certain products will be eliminated than under the existing German Supply Chain Act. The association is not aware of any products from certain regions being eliminated as a result of the introduction of the German law.

How do politicians and civil society react to the EU decision?

Federal Development Minister Svenja Schulze stressed that the EU is the first major economic area to make responsible business conduct the standard. “This is good news for all people around the world who suffer from miserable working conditions,” said the SPD politician. Sven Giegold, State Secretary in the Federal Ministry of Economics, announced: “We will now ensure effective and low-bureaucracy implementation in Germany.”

The spokesman for the Supply Chain Law Initiative, Johannes Heeg, spoke of a “paradigm shift in the fight against human rights violations and environmental destruction by companies” that was a success for civil society. Organizations such as Amnesty International, the German Trade Union Confederation and Greenpeace have joined forces in the initiative.

What do business representatives say about the EU law?

The German Chamber of Industry and Commerce (DIHK) and the Association of the Automotive Industry (VDA) made demands to the federal government. “To ensure that German companies do not suffer a competitive disadvantage in the internal market, the federal government must immediately suspend the German supply chain law until the EU regulation has been implemented into national law,” said DIHK General Manager Martin Wansleben. VDA President Hildegard Müller made similar comments. The DIHK stressed that as long as there is no supply chain law in many other EU countries, the German law creates competitive disadvantages for the economy here.

How do the European and German supply chain laws differ?

One of the biggest differences is liability: German law excludes companies from being liable for breaches of duty of care – EU law allows this. In addition, the German supply chain law applies to companies with 1,000 or more employees. In the coming years, more companies in Germany will be affected by the German version than by the EU version.

How was EU law weakened in the negotiation process?

Originally, a compromise reached by negotiators from EU member states and the European Parliament stipulated that companies with more than 500 employees and at least 150 million euros in turnover would be affected by the requirements. However, this limit was raised to 1,000 employees and 450 million euros after a transition period of five years. After three years, the requirements will initially apply to companies with more than 5,000 employees and more than 1.5 billion euros in turnover worldwide; after four years, these limits will then be reduced to 4,000 employees and 900 million euros in turnover.

What happens if EU law is violated?

The EU states should appoint a supervisory authority to keep an eye on companies. This authority should also be able to impose penalties on companies if they do not comply with the regulations. Fines of up to five percent of a company’s global net turnover can be imposed.

What role did Germany play in negotiating the law?

The reason for the German abstention is disagreement within the federal government. Important EU laws are repeatedly passed in Brussels without German approval. In this case, the FDP had pushed for Germany not to agree to the law, out of concern about bureaucracy and legal risks for companies. Politicians from the SPD and the Greens, on the other hand, support the regulation.

Source: Stern

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