May 04, 2021

A bill requiring companies to conduct human rights due diligence on their supply chains is under consideration in the German parliament. The proposal sets out human rights and environment-related obligations for companies, including fair and favorable working conditions, compliance with adequate living standards, freedom from child and forced labor, and protection against torture.

Companies would be required to conduct a risk analysis of their supply chains, and take measures to prevent, minimize and resolve any violations, including the termination of supplier relationships where necessary. Companies breaching their due diligence obligations could face fines of up to €800,000, or 2% of turnover for companies with an annual turnover of €400 million or more. If approved, the law could take effect on 1 Jan 2023 for companies with more than 3,000 employees, and from 2024 for those with more than 1,000 employees.
 

The 2018 coalition government agreement included a commitment to introduce supply chain due diligence if 50% of Germany’s largest employers did not voluntarily introduce supply chain due diligence procedures. To date, only 13% to 17% of those companies have voluntarily met the due diligence requirements, and a further 10% to 12%  were reported to be “on track.”
 

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by Rudolf Glekler
Associate, Mercer Career

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Principal, Mercer’s Law & Policy Group

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Principal, Mercer’s Law & Policy Group



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