Mandatory Due Diligence in German Supply Chains

Written by Jonathan Layt, Sustainability Analyst at Eurofins | BLC Leather Technology Centre Ltd.

Germany has recently passed legislation that requires large businesses to conduct due diligence on their supply chains. Germany’s new supply chain due diligence law – ‘Lieferkettengesetz’ – follows similar laws from UK and France. Increasingly, European countries are looking to implement similar laws.

The new due diligence law requires companies to monitor and address challenges in their supply chains, including workers’ rights and environmental standards. Companies will have to ensure that they are addressing these challenges for their direct and indirect suppliers, as well as their own operations.

The law will come into effect for large companies (with more than 3,000 employees) from 2023. In 2024, the law will be expanded to cover medium sized companies (with more than 1,000 employees). Companies found to be in breach of these laws could face fines, controls, and sanctions.

Companies working in the textile, clothing and footwear sectors have been identified specifically as having supply chains with high risks of workers’ rights and environmental standards breaches.

In order for companies to minimise such risks, it is crucial for them to understand their supply chains clearly through collecting data, identifying suppliers and the relevant commercial relationship, ensuring compliance to required standards and validating suppliers’ claims, thereby making informed decisions.  

The Supply Chain mapping services, available at Eurofins, helps customers of different sizes to effectively manage suppliers and evaluate the risks levels. Find out more here.