EU Council agreement on supply chain law ups pressure on Germany to follow suit

EU member states have reached an agreement on a new supply chain law, which is to hold countries and companies accountable for ensuring that social and environmental standards are upheld across the entire production chain. The EU Council, which consists of the member states' governments, has now called on the EU Commission to come up with a legal framework that ensures due diligence by affected companies. In Germany, the project of a national supply chain law is on hold due to disagreements within the coalition. 

Pirmin Spiegel, head of humanitarian NGO MISEREOR, welcomed the EU Council's decision. "Only in this way can a supply chain law be effective for people who produce for German and European industry and consumers under unworthy working conditions. Germany must not fall behind the European consensus on this important point," Spiegel said. Gabriela Heinrich, vice head of of the Social Democratic Party's (SPD) parliamentary faction, says the conclusion adopted by the Council is an important step forward. “It complements our efforts to achieve a national supply chain law that must not be blocked any further. Experience shows that there is a need for binding legal provisions on corporate due diligence.” Christoph Bals, political director of Germanwatch, also called for more rapid action on the federal level. "The competitive argument against a German law now collapses. We expect that Chancellor Merkel’s government will come to a rapid agreement on the key points for a supply chain law and - as provided in the coalition agreement - pass a law before the end of this legislative period.”

In June of this year, the ministers for labour and for development cooperation, Hubertus Heil and Gerd Müller, jointly advocated the introduction of a German supply chain act after a survey of thousands of large companies showed that only a small number already apply and monitor compliance with minimum standards of upstream business partners. Labour minister Heil has recently urged the coalition to find a compromise. "I am not satisfied that the discussion is taking so long," the SPD politician told the press agency dpa. More and more companies that want a supply chain law worry being put at a competitive disadvantage with respect to international competitors, Heil said. "Whether in the textile industry, regarding agricultural products or the promotion of raw materials for electromobility - it is a growing topic," said Heil.