The EU Commission, Council and Parliament agreed on the key points of the new EU supply chain law at the end of last year. Respect for human rights and environmental protection are at the centre of this. They are to be anchored as company rules in all global value chains. The scope of application is broader than the German Supply Chain Duty of Care Act.
The measures include requiring companies to introduce human rights risk management. In addition, companies, including the financial sector, must adopt a plan to ensure that their business model is compatible with limiting global warming to 1.5°C .
Which companies are affected?
Companies with more than 500 employees and a turnover of more than 150 million euros will then be responsible for their supply chains - and therefore also for their business partners.
Companies with more than 250 employees and a turnover of more than 40 million euros, if 20 million euros are generated in certain sectors, will then also be affected by the new EU supply chain law.
These industries include:
Textile, clothing and footwear industry, agriculture including forestry and fishing, manufacture of foodstuffs and trade in agricultural raw materials, extraction and wholesale of mineral raw materials or manufacture of related products and construction.
Small and medium-sized enterprises do not fall within the scope of the new law, but non-EU companies and parent companies that achieve a certain turnover do.
Measures and sanctions
Companies subject to the new Supply Chain Act will face sanctions if they do not implement the new measures.Sanctions include measures such as "naming and shaming", the withdrawal of a company's products from the market or fines of at least 5% of global net turnover. Non-EU companies that do not comply with the rules will be excluded from public contracts in the EU.Current statusThe negotiation process was supposed to be completed in December 2023, the final vote in the EU Council is a mere formality, but the German government has announced that it will now abstain from the vote due to the FDP's negative stance.
Link:
Corporate due diligence rules agreed to safeguard human rights and environment
Source:
European Parliament