Nachrichten & Pressemeldungen - © FEMNET 26 September 2023 After Habeck's advance: What impact does the suspension of reporting obligations have on companies? At the beginning of the week, Robert Habeck, Federal Minister of Economics, announced that he would suspend the reporting obligation for companies. In doing so, he wants to relieve the burden on companies, which are then only to report on compliance with their due diligence obligations in accordance with European directives. Many business-oriented media and trade associations welcome this step, which Habeck says should be implemented as soon as possible. However, it is ignored that this exposes an essential pillar of the German Supply Chain Act for the observance of human rights and the protection of the environment. The German Supply Chain Act and its importance Since January of this year, the German Supply Chain Act has been in force, a milestone for efforts to comply with human rights and environmental protection in global supply chains. As of 2023, companies with more than 3,000 employees are required to report on their business practices. These reports need to be made available to the public to ensure transparency and accountability. Michelle Trimborn, spokesperson for the Supply Chain Act initiative, stressed: "Reporting obligations are not a bureaucratic exercise that can only be ticked off by companies and only creates burdens. On the contrary: Public reports are central to the implementation of the Supply Chain Act for all actors: They create the necessary transparency to keep up with the efforts of the companies. This is the only way for both BAFA – the supervisory authority for the Supply Chain Act – and the parties concerned to understand whether companies are complying with their due diligence obligations.’ Gisela Burckhardt, FEMNET Chair, adds: “The effort required to implement the reporting requirements is mainly in the first year to establish effective processes for identifying and processing risks. Once a structure for collecting the data has been created, the workload will be significantly reduced in the following years.” The suspension of the reporting obligation – a false signal The reports are due four months after the end of the financial year and must be submitted to the Federal Office of Economics and Export Control (BAFA). In concrete terms, this means that reports must be submitted for the first time more than one year after the entry into force of the national law, i.e. 2024. This period provides companies with sufficient time to prepare for the new requirements and take appropriate action. Although a European supply chain law is planned, negotiations on its design are still ongoing. Even if a draft is finalized, it is far from clear when it will come into force. In addition, each EU country must transpose the Directive into national law. The whole process can take years. Years when companies don't have to be accountable. In addition, Robert Habeck rewards the wrong people with the suspension of the reporting obligation. The proposal by the Minister for Economic Affairs does not relieve companies that strive to respect human rights and protect the environment. The project is of particular benefit to companies that have not yet fulfilled their obligations. A completely wrong signal when it comes to establishing and promoting responsible business practices. conclusion The suspension of the reporting obligation for companies may seem like a relief at first glance, but it entails significant risks. It could lead to companies having less incentive to implement responsible business practices as they no longer have to be publicly accountable. This could endanger human rights and environmental protection in the long term. It is important that companies remain committed to transparency and accountability, as required by the German Supply Chain Act. Careful implementation of these laws is the right way to ensure that companies assume their responsibilities and contribute to improving global business practices.
