Supply Chain Act

The EU Supply Chain Act obliges companies to comply with human rights and environmental due diligence obligations along their supply chain. It requires the identification and mitigation of risks, regular reporting and enables liability in the event of violations. The aim is to promote responsible corporate practices and safeguard international standards. This applies to large companies in the EU as well as foreign companies with a significant EU presence and aims to make global supply chains more sustainable and ethical. Read the latest news on the EU Supply Chain Act from the Table.Briefings editorial team. What is the EU Supply Chain Act? The EU Supply Chain Act, also known as the EU Supply Chain Due Diligence Act, is legislation that requires companies to ensure human rights and environmental standards in their supply chains. The aim of the law is to ensure that companies act responsibly along their entire supply chain and minimize negative impacts on human rights and the environment. Key points of the EU Supply Chain Act: The EU Supply Chain Act aims to promote sustainable and responsible corporate governance and ensure compliance with international standards for human rights and environmental protection. What are the benefits of the EU Supply Chain Act? The EU Supply Chain Act brings many benefits: Human rights: Environmental protection: Economic benefits: Legal clarity: The law promotes responsible corporate governance and strengthens consumer and investor confidence in sustainable business practices. What are the disadvantages of the EU Supply Chain Act? The EU Supply Chain Act also brings some disadvantages: Costs and effort: Impact on small and medium-sized enterprises (SMEs): Supply chain complexity: Risk of market distortions: These disadvantages could affect the competitiveness and profitability of companies. Who does the EU Supply Chain Act apply to? The EU Supply Chain Act applies to: It affects companies based in the EU as well as foreign companies operating in the EU. Smaller companies can also be affected if they are part of the supply chains of larger companies and have to support their due diligence obligations. Does Germany also have a supply chain law? Yes, Germany has a supply chain law, known as the Supply Chain Due Diligence Act (LkSG), which came into force on Jan. 1, 2023. This law obliges large companies to monitor and ensure human rights and environmental standards in their supply chains. 1. scope of application: The law initially applies to companies with at least 3,000 employees, from 2024 also to companies with at least 1,000 employees (DW). 2. due diligence obligations: 3. responsibility: The German Supply Chain Act is intended to encourage companies to make their global supply chains more sustainable and social in order to minimize human rights violations and environmental damage. It lays an important foundation for responsible corporate governance and serves as a model for similar European and international legislation (DW).