The German parliament passed a law last week that warrants large and medium businesses to conduct due diligence in combating human rights violations and environmental abuses along their supply chains. The law introduces a shift to mandatory compliance with international norms on labour exploitation. The Bundestag adopted the draft law by a large majority.

Failure to act may result in penalties up to 2 per cent of the company’s international revenue and violating companies may be excluded from public procurement for up to three years, according to reports on legal websites.

The law applies to companies with more than 3,000 employees as of 2023, and 1,000 employees in 2024. This would result in nearly 4,800 companies being affected.

Human rights groups have applauded the development, but caution that more needs to be done. Human Rights Watch said the law “will require large companies to regularly and systematically identify and address human rights and environmental risks” but “does not incorporate the highest international standards.”

A coalition of 50 companies that included Ben & Jerry’s and Tchibo had called upon the Bundestag to strengthen the law during preliminary debates. The coalition asked the German Parliament to apply the UN Guiding Principles consistently and ensure proactive due diligence obligation cover the full supply chain.

Fibre2Fashion News Desk (DS)

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