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German Supply Chain Act

What is the German Supply Chain Act? 

The German Supply Chain Act, also known as Lieferkettengesetz, is a landmark legislation enacted to promote corporate social responsibility and ensure ethical practices throughout global supply chains. Introduced in 2021, the law applies to German companies with over 3,000 employees, requiring them to monitor and address human rights abuses, environmental violations, and labor standards in their supply chains.

Key provisions of the German Supply Chain Act

The German Supply Chain Act mandates companies to conduct due diligence measures to identify, prevent, and mitigate risks of human rights violations and environmental harm within their supply chains. This includes implementing risk management systems, conducting regular audits, and establishing grievance mechanisms for affected stakeholders.

Impact and compliance

The Act places significant responsibility on businesses to uphold ethical standards and transparency in their supply chain operations. Non-compliance with the legislation can result in fines and reputational damage. As a result, affected companies must invest in robust supply chain management systems and collaborate with suppliers to ensure compliance with the law.