What is the “Due Diligence Law in the German Supply Chain” all about?
Germany has enacted the German Supply Chain Due Diligence Act (SCDDA) to focus on child labor, slavery, safety in the workplace, employment and wage discrimination, and environmental harm. SCDDA comes into effect on January 1st 2023. Under the Act, all Germany-located enterprises (domestic or foreign) employing at least 3,000 workers will be required to prevent or at least minimize human rights and environmental rights infringements in their supply chains. From January 1st 2024 on, this threshold is reduced to only 1,000 employees.The Act covers not only the company’s own activities but also the activities of all direct and indirect suppliers in the supply chain.
Even though the Act comes into effect not until 2023, the following circumstances need to be addressed by companies:
- Disregard of occupational safety and health obligations
- Disregard of the freedom to organize in labor unions
- Discrimination, including unequal pay for equal labor
- Denial of adequate pay (not less than applicable minimum wage)
- Harmful soil changes, water pollution, air pollution, noise emissions or excessive water consumption, which have a certain impact on people (e.g. health effects or the inaccessibility to clean drinking water)
- Use of mercury compounds or persistent organic pollutants
- Nonenvironmentally sound handling, collection, storage and disposal of waste
- Prohibited Exports and Imports of hazardous wastes
The German Supply Chain Due Diligence Act is detailed below:
Following is the Guidance Book on conducting a risk analysis as required by the German Supply Chain Due Diligence Act