Germany Eases Supply Chain Rules for Larger Firms

The German cabinet took significant steps to amend the national supply chain law on Wednesday, making it less cumbersome for larger firms by easing certain documentation requirements, which were previously deemed costly and overly bureaucratic. These changes are expected to lessen the burden on Germany's biggest companies as they comply with the law.

Implemented at the start of 2023, the legislation obliges German companies with over 1,000 employees to carry out due diligence procedures to ensure their suppliers adhere to human rights and environmental standards. According to Reuters, the regulation has often shifted its impact onto smaller suppliers and overlaps with upcoming EU-wide directives, which countries must incorporate into their own legal frameworks by July 2027.

The ruling coalition initially considered abolishing the national supply chain law entirely but decided to maintain it until the EU supply chain regulations come into play. Labour Minister Baerbel Bas announced that until then, only serious breaches, such as grave violations of human rights, would incur penalties, with the Labour Ministry estimating a cost reduction of 4.1 million euros annually for businesses.

(With inputs from agencies.)