In 2023, the Supply Chain Due Diligence Act came into force in Germany. Under this act, companies are obliged to identify and assess potential risks to the environment and human rights in both their direct and indirect supply chain.
Businesses will face fines for failing to comply with these new regulations – for companies with an annual worldwide turnover of more than €400 million, this fine could be up to 2% of their annual group turnover.In January 2024, the scope of this act will be expanded to include any businesses that have a branch with more than 1,000 employees in Germany. This will not only impact companies with a presence in Germany, but also the businesses that supply those companies.
If you trade with any German companies, this could affect you. To learn what steps you can take to protect your business, click the button below to get in touch with our team.
How Could This Act Affect You?
More than 35,000 UK businesses exported goods to Germany in 2021. With the expansion of the Due Diligence Act, many of these businesses will be held accountable by their German customers. If they are unable to prove that they are taking action to address potential ESG abuses in their supply chain, they risk losing business. This applies to SMEs, as well as large multinational businesses.
UK companies with branches in Germany that employ more than 1,000 employees will also be subject to the law, meaning that they will need to dedicate substantial resources to identifying and resolving issues amongst their suppliers.
How We Can Help?
Our partners at The Disruption House can help your business establish a sustainable and socially responsible supply chain. They can help you comply with all of the key requirements of the act, including:
✔️ Issuing your policy on human rights strategy
✔️ Introducing preventative measures in your business structure, including a whistleblower system
✔️ Identifying potential ESG abuses in your supply chain and taking steps to remedy those issues.
By establishing a strong ESG agenda now, you could set your business up for success in the long term, as we are likely to see similar laws enacted in a number of countries in the years to come.
To learn more about how The Disruption House can help your business, click here.
