On 24 April 2024, the European Parliament is expected to formally adopt the much-discussed EU Supply Chain Act. The so-called Corporate Sustainability Due Diligence and amending Directive aims to make companies more accountable for the fulfilment of human rights and environmental protection measures. Companies that continue to use forced labor or commit serious environmental infringements, for example, will be easier to identify and sanction in future. In addition, the import, export and placing on the market of goods from illegal production facilities on the EU’s internal market will be banned.

To make the directive more practicable and minimize the additional bureaucratic burden, in particular for small and medium-sized companies, changes were made to the law until the very end. As a result, the key factors for the future application of the Supply Chain Act (number of employees, net turnover worldwide) were significantly increased and divided into the following stages:

• 3 years after the law comes into force, the directive applies to companies with at least 5000 employees and a minimum turnover of 1.5 billion euros
• 4 years after the law comes into force, the directive applies to companies with at least 3000 employees and a minimum turnover of 900 million euros
• 5 years after the law comes into force, the directive applies to companies with at least 1000 employees and a minimum turnover of 450 million euros

In addition, all special regulations for companies from certain sectors (agriculture and forestry, fisheries, food industry, textile industry) with previously much stricter requirements have been removed from the text of the law but can be reinstated later. A review clause for individual cases implemented in the law makes this possible.

For downstream activities such as distribution, transport and storage, only direct business relationships that are established on behalf of the company, will be scrutinized for the necessary due diligence obligations. It is worth mentioning that the disposal of products has been removed from the definition of downstream activities.

The requirements for the liability of entrepreneurs under civil law have only been adjusted slightly and remain largely strict.

Sources: DIHK (German), ra-moellenhoff.de (German)