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April 23, 2021updated 04 Jun 2021 10:20am

German supply chain law reaches parliament

Germany’s new proposed law on due diligence in supply chains has its first reading in the Bundestag, the German parliament – but unions are concerned that employers’ associations will attempt to block it or dilute its proposals.

By Leonie Barrie

Germany’s new proposed law on due diligence in supply chains has its first reading in the Bundestag, the German parliament – but unions are concerned that employers’ associations will attempt to block it or dilute its proposals.

German unions have campaigned for years for a supply chain law to strengthen the human rights due diligence obligations of German companies. But even though the government is now on the verge of passing this law, unions believe business and employers’ associations are attempting to prevent or further undermine the law.

Speaking at the IndustriAll Global Union executive committee meeting on 22 April, IndustriAll president Jörg Hofmann said: “After a long struggle, and with the support of the trade union movement, we have succeeded in achieving a bill that will oblige companies to take responsibility for what happens in their supply chains, making global trade fairer.

“If companies fail to meet their human rights obligations, trade unions and NGOs will be able to sue them in German courts.”

In February this year, a draft text of the law was published, which unions say contained disappointing compromises. For instance, the law will initially cover only companies with more than 3,000 employees, and only cover direct suppliers, while most abuses occur further down the supply chain.

A provision for a Safe Harbour standard that would allow companies to limit their liability by signing a global framework agreement with the relevant global union was also not included.

However, unions welcome the law as setting an important precedent that would also help to promote due diligence legislation at European level.

Wolfgang Lemb, executive committee member of IndustriAll affiliate IG Metall said: “The paradigm shift from voluntary commitment to human rights due diligence by companies to legal regulation is within reach. We need this law so that we can finally take an important step closer to humane working conditions along the supply chain.”

Unions have a number of criticisms of the draft law:

The draft law only holds companies responsible for direct suppliers. However, it is often the indirect suppliers at the end of the supply chain who violate human rights most seriously.

The draft law does not provide for trade unions and works councils to be involved in risk management within the company. It also makes no provision for the involvement of unions representing affected parties in the supply chain. Participation rights for unions should be strengthened, using global framework agreements as a positive example of social dialogue.

The draft law often refers to national law in supplier countries when considering human rights. However, in some countries it is compatible with national law to restrict freedom of association and prevent trade union activity.

In an interview with Euractiv, the president of IndustriAll affiliate IG BCE, Michael Vassiliadis, said: “Many multinational companies accept workers’ rights and co-determination in Germany and Europe. But when we point out problems in other countries, they reply that they do nothing there that is not mandatory. Which is true, because in Asia or South America, for example, workers’ rights are not yet as developed, but universal human rights should apply worldwide.”

Unions are also calling for companies whose headquarters are not in Germany to be included in the new regulations if they have major operations in Germany.

The legislation is expected to be passed before the elections in autumn 2021, and to come into force at the beginning of 2023.

Click on the following link for more details on the new legislation that will force companies to comply with social and environmental rules along their global supply chains: Germany agrees new law on supply chain due diligence

This article was first published by the IndustriAll global union.

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