Nachrichten & Pressemeldungen - © FEMNET 24 February 2022 EU Supply Chain Act: Not consistent enough for ‘large litter’ On 23 February 2022, the EU presented its draft pan-European supply chain law. This is a good signal for compliance with human rights and climate protection along global supply chains. In terms of the size of the companies, the EU draft is more ambitious than the German one. At the same time, there is also a lack of sufficient liability rules for companies or references to gender-sensitive measures to protect workers, especially women and girls, from exploitation and violence. "It is welcome that in some respects the EU Supply Chain Act is somewhat more far-reaching than the German one. For example, medium-sized companies with more than 250 employees in high-risk areas such as clothing should also demonstrate in the future that they comply with their duty of care, in particular with regard to many clothing companies. This is an overdue step, because respect for human rights must not depend on the size of the company. It is also positive that the EU, in contrast to German law, allows a civil lawsuit by those affected before a court in Europe for the violation of labour rights. However, the scope of the civil liability regime is limited. If EU companies have been contractually assured by their business partners that they comply with the company's code of conduct, EU companies can be safe from civil liability claims.The limitation of due diligence obligations to companies that have so-called ‘established business relationships’ with their suppliers is also of utmost concern. This is almost an invitation to companies to change their suppliers frequently, which would be the opposite of acting responsibly. As in the German law, there is no reference in the EU Commission's draft to the particular concern of women in the supply chain with regard to gender-based violence in the workplace, which necessitates gender-sensitive measures. There is also no reference to the ILO Convention 190 on Gender-Based Violence at Work, adopted two years ago.", comments Dr Gisela Burckhardt, FEMNET CEO, on the EU draft supply chain law. Below is the press statement of the Supply Chain Act initiative of 23.02.2022 Berlin, 23 February 2022. The European Commission today presented its proposal for a pan-European supply chain law. Johannes Heeg, spokesperson for the civil society alliance ‘Initiative Supply Chain Law’, said: "With this draft, the EU is finally laying the foundations for less exploitation and environmental degradation in the supply chains of European companies. For the big throw, however, the EU would have to handle the hot irons more consistently: Due diligence obligations not only for one percent of companies. Clear climate-related obligations in the supply chain. And a liability regime without loopholes that finally creates justice for those affected by human rights violations. At these points, the Commission has given in to the lobbying pressure of the major business associations. The Federal Government therefore now has a clear mandate to act: It must use its influence in the EU to advocate for improvements. Finally, in the coalition agreement, it committed itself to an “effective” EU supply chain law. It is gratifying that the EU draft fills some gaps in the German law and takes responsibility for companies along their entire supply chain. The envisaged civil liability also gives rise to hope. However, it remains questionable whether those affected will actually be able to claim damages from companies in the future. The limitation of due diligence obligations to “established business relationships” is critical – no one should be able to circumvent these obligations through frequent switching of business partners. The fact that companies now have to draw up a climate protection plan in accordance with the 1.5°C objective of the Paris Agreement is generally welcome. However, it is unacceptable that companies that do not live up to their plan have no liability to fear. In view of the rapidly advancing climate change, the project is simply not up-to-date at this point.” Background: Today, the European Commission published its draft "Directive on Corporate Sustainability Due Diligence", the so-called EU Supply Chain Act. With this project, the EU wants to oblige companies to identify risks for human rights violations and environmental degradation in their supply chains and to take countermeasures. The rules will apply to all companies in the EU single market with more than 500 employees and a net annual turnover of EUR 150 million. In the risk sectors of textiles, agriculture and mining, the obligations should already apply to companies with 250 employees and a net turnover of EUR 40 million. Transport, construction, energy and finance are not defined as risk sectors, although there are often significant risks of environmental damage and human rights violations. In principle, the obligations should apply along the entire supply chain. Although these points go beyond the German Supply Chain Act, the EU Supply Chain Act would cover less than 1% of all companies in the EU. It also limits companies’ due diligence obligations to ‘established business relationships’ – a potentially large legislative loophole. In order to prevent damage, the EU draft provides for sanctions and fines, similar to the German law, if companies violate their obligations. The EU draft also includes a civil liability regime that allows those affected by human rights violations or environmental damage to sue the companies causing them. However, the hurdles for such actions remain very high due to a lack of reversal of the burden of proof, and there is a possibility that companies may evade their responsibility through contractual clauses. The Commission's draft stresses the central importance of the private sector in meeting the 1.5°C limit under the Paris Agreement on climate change. Just like the German Supply Chain Act, however, it fails to impose independent climate-related due diligence obligations on companies. The Commission's draft will now go to the European Parliament and the Council in the further procedure. Once adopted, EU member states must transpose the directive into national law. In this case, Germany will have to adapt the Supply Chain Act adopted in 2021. Originally, EU Justice Commissioner Reynders had announced that, together with the EU Supply Chain Act, he would also re-regulate the sustainability obligations of management boards (‘Directors’ Duties’). However, this part of the legislative package has been greatly reduced by the EU Commission after strong protests from business associations. Contact: Supply Chain Act initiative Johannes Heeg, speaker, Tel.: 0151-10611346, E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it. Further information: www.lieferkettengesetz.de The Supply Chain Act initiative is supported by: Deutscher Gewerkschaftsbund (DGB), European Center for Constitutional and Human Rights (ECCHR), FEMNET e.V., Forum Fairer Handel e.V., Germanwatch e.V., Greenpeace e.V., INKOTA-netzwerk e.V., Bischöfliches Hilfswerk MISEREOR e.V., Oxfam Deutschland e.V., SÜDWIND e.V., ver.di - Vereinte Dienstleistungsgewerkschaft, WEED - Weltwirtschaft, Ökologie & Entwicklung e.V., Weltladen-Dachverband e.V., Werkstatt Wirtschaft e.V. A further 110 organisations support the Supply Chain Act initiative.
