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Act Now or Face Fines Later: Labor Solutions Launches Free German Supply Chain Act Compliance Guide

Updated: Nov 21, 2022

Labor Solutions launched a free German Supply Chain Due Diligence Act Guide - a step-by-step walkthrough of the Act with detailed guidance + practical solutions; including what baseline steps you need to take to comply with human rights compliance by Jan 1, 2023.

Request your free copy of the guide today and learn more about the Act below:

Dem deutschen Volke

Photo of the German Bundestag courtesy of the Business and Human Rights Resource Centre

What is the German Supply Chain Due Diligence Act:

In June 2021 the German Government passed new ESG (Environmental, Social and Governance) legislation called the German Act on Corporate Due Diligence in Supply Chains – commonly referred to as the “Supply Chain Act.” This Act requires large companies to impose social and environmental due diligence standards on their supply chains. Specifically, it requires companies to monitor their own and those of their direct suppliers and take action if violations are identified.

The law comes into effect on January 1st, 2023, with an expansion in 2024.

Who the German Supply Chain Due Diligence Act Applies to:

By January 2023:

  • Partnerships and corporations with headquarters, principal place of business, administrative headquarters, registered office or a domestic branch in Germany and employ more than 3,000 employees across the entire group

  • From 2024 the Supply Chain Act will also apply to; Companies who meet the above requirements and have over 1,000 employees

  • Note that the total number of employees includes: Employees of both parent and group companies; Temporary workers employed for over six months and; workers posted abroad

Why You Should Start Complying Now:

  • Fines of up to €800,000 can be imposed on companies that violate their due diligence and reporting obligations – that’s up to 2% of average annual global turnover for companies with an average annual global turnover of over €400 million

  • Companies who do not comply also be excluded from winning public contracts in Germany for up to three years

  • Civil liability maybe imposed and damages may have to be paid to victims of human rights violations.

In addition to legal requirements, updating human rights due diligence helps companies meet consumer, investor, employee and other stakeholder demands. A global report from HSBC found that 86% of businesses expect their sales to grow over this year through a stronger focus on sustainability, making compliance a potential benefit for companies’ bottom line

What Your Company Must Do Next: Getting your business ready to comply with the German Supply Chain Act includes:

  • Risk assessment and analysis

  • Policy statement drafting

  • Setting up a complaints procedure

  • Applying preventative + remedial measures

  • Documenting and reporting on everything

How Labor Solutions Can Help: Implementing the law in practice won't be easy, particularly for those with complex supply chains. We’ve spent the last decade working with multi-national companies to design sustainable and scalable human rights programs throughout complex supply chains. Our team of experts and our technology tools are equipped to guide and support you wherever you may be in your journey. To help companies meet these specific challenges Labor Solutions has designed a Human Rights Due Diligence program that focuses on helping companies:

  1. Assess risks through ongoing, regular analysis

  2. Identify adverse impacts through proactive + reactive complaints collection

  3. Prevent human rights violations in your business + supply chain

  4. Remediate violations to an end

Get started today by requesting your free copy of the German Supply Chain Due Diligence Act Guide here.

About Labor Solutions

Labor Solutions, an impact-focused business, leverages technology to connect, engage and educate workers to build resilient supply chains. Over a million and a half workers in 25 countries have access to Labor Solutions’ worker engagement platform, WOVO. Workers can respond to worker surveys, report grievances and access eLearning modules on rights and responsibilities.

Please reach out to our team to learn more:


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