The Lieerkettengesetz is a law that came into force in Germany in 2023, a law that aims to ensure corporate compliance with human rights and environmental standards in global supply chains. In this article on our website, we elaborate on the how and why of this law. As of Jan. 1, 2024, the law has been amended and its scope expanded.
Update
As of Jan. 1, 2024, the Lieferkettengesetz also applies to companies with more than 1,000 employees. This means that these companies must also follow rules on how to treat people and how to treat nature throughout their production process. As a result, smaller companies may also have to deal with the new law sooner than perhaps thought, because they often supply to large companies that must comply with these rules.
This law has already had an effect in Germany, but with the implementation of the EU directive, it goes even further. Do you do a lot of business with Germany? Then it is advisable to be aware of these changes and what it can mean for your business.
Deal well with employees
An important part of the Lieferkettengesetz is that companies must ensure that not only their own employees are treated well, but also the people who work for their suppliers. This ensures that workers' rights are respected and working conditions are improved everywhere. Companies must comply with specific rules on wages, working hours, safety at work and the right to join a union.
Take good care of the environment
The Lieferkettengesetz also forces companies to take responsibility in their production chain where the environment is concerned. This means that they have to try to reduce the bad impact on the environment and do more about sustainable business and sustainability. Companies must follow certain rules about how much energy they use, how much pollution they create, how they treat waste and how much they use renewable energy sources. They must also actively try to reduce and prevent environmental risks.
Impact on smaller businesses
As indicated earlier, smaller companies will face the Lieferkettengesetz sooner than expected. Even if they are not directly covered by the new law because of their size, they will be held liable if they are part of a supply chain.
Smaller companies that supply stuff to large partners must also comply with rules on how to treat people and the environment. Therefore, they will have to scrutinize and evaluate their ways of working.
Doing business across the border? Get in touch with us
Are you already doing business in Germany? Or are you considering doing so? Then it is important to be well informed about these developments. Human and environmental compliance will be an important part of doing business in Germany. We can advise you on the possible consequences of this legislation and help you implement appropriate measures to meet the set standards: for example, reviewing and adapting contractual arrangements or advising on internal processes and procedures. Please contact us: we will be happy to assist you.
