On January 1, 2023, the Act on Corporate Due Diligence Obligations will come into force. This means that companies with more than 3,000 employees will have to meet new obligations – companies with more than 1,000 employees will follow in 2024.

The goal of the Act on Corporate Due Diligence Obligations in Supply Chains

The Act on Corporate Due Diligence Obligations in Supply Chains is based on the UN Guiding Principles on Business and Human Rights. Those were passed in 2011 and and imposed responsibilty for protecting human rights in particular on the companies – not only on the states. The aim of the Act on Corporate Due Diligence Obligantions is to better protect human rights along the entire supply chain. Sustainability and environmental protection are also to be given greater focus. At the same time, the legislation creates legal certainty for companies.

Implementation of the Act on Corporate Due Diligence Obligations in Supply Chains

Companies are obliged to check actors along their entire supply chains and to examine them for possible negative social and environmental impacts. Are environmental and social standards complied with? If this is not the case, it is the company’s responsibility to improve it. A risk analysis is carried out once a year.

It is important for companies to prepare themselves for the upcoming law. For this purpose, various auxiliary tools for the supply chain check, such as the CSR risk check, are available. In addition, the Federal Office of Economics and Export Control (BAFA) publishes supporting handouts.

In addition to detailed information on the implementation of the supply chain law, the IHK Munich and Upper Bavaria also has valuable tips for effective cooperation with suppliers and other actors in the supply chain.

Check the Website of CSR initiated by the Federal Ministry of Labour an Social Affairs for more information in the English language.

Source: IHK Munich and Upper Bavaria (German)