Germany Considers Two-Year Pause on Costly Supply Chain Law
The supply chain act, effective since January 2023, has imposed significant costs and administrative burdens on German companies
The German government is considering pausing a costly due diligence law that's slowing down its supply chain, Economy Minister Robert Habeck announced on Friday. The pause would last two years and ease the bureaucratic burden on companies until a European directive takes effect,
“We can pause it. That would be the best thing. I think that is absolutely feasible,” Habeck told Reuters.
The law took hold in January 2023 and requires companies with over 1,000 employees to implement due diligence procedures to ensure their suppliers adhere to human rights and environmental protection standards. The new law is hurting the bottom line and hampering their ability to compete in the global market, the companies argue.
A comparable European Corporate Sustainability Due Diligence Directive (CSDDD), approved by the European Union parliament in April 2024, is set to be enforced in 2026. This upcoming European legislation will necessitate Germany to revise its national supply chain law.
A decision on this proposal is expected within the next two to three weeks. The proposal has sparked mixed reactions within the government coalition.
“Does a top Green politician seriously want to sacrifice human rights in order to curry favor with family businesses?,” SPD labor policy lawmaker Martin Rosemann told Reuters.
In contrast, FDP lawmaker Carl-Julius Cronenberg supported the suspension, suggesting it would offer essential breathing space for small and medium-sized enterprises during challenging economic times.
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