The federal government has agreed on a supply chain law for companies. A step-by-step plan is planned, according to which only large companies can initially be held responsible for the grievances of their suppliers. The law is to be passed before the federal election in September 2021, but will not come into force until the beginning of 2023.
Companies are obliged to enforce human rights with their suppliers abroad. In this way, child labor and forced labor are to be prevented or at least reduced. In addition, companies are obliged to pay more attention to environmental standards. Extensive civil liability for maladministration in the supply chain, which could have led to litigation worth billions, is off the table under pressure from the CDU-led Ministry of Economic Affairs.
Ministry of Economic Affairs does not want to overwhelm small businesses
In the future, companies will only have to expect a fine for breaches of their duty of care. They should then be excluded from public tenders for up to three years.
Companies see the project as a threat to Germany as a business location. The Ministry of Economic Affairs had insisted on not overloading small companies.
The Supply Chain Act is now to be binding for corporations with more than 3000 employees from 2023, and then for companies with more than 1000 employees from 2024. According to Heil and Müller, voluntary commitments by the industry have failed because only a fifth of companies adhere to them.
The focus is on the food and textile industries. In the future there should be less child labor and starvation wages with which products such as tea bags, chocolate, jeans or laptops can be manufactured as cheaply as possible.
Volkswagen alone has around 40,000 suppliers worldwide. Business representatives recently warned against going it alone at the national level. If at all, a supply chain law should, from their point of view, be aimed for at European level or within the framework of the 20 leading industrial and developing countries (G20).
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