The German Supply Chain Due Diligence Act 2021 and Its Impact on Globally Operating German Companies

Abstract

The German Supply Chain Due Diligence Act 2021 aims to enforce human rights standards in the entire supply chain from raw material to end product. It applies to bigger companies that have their administrative headquarters or registered office in Germany, including companies which have a branch office in Germany. The SCDDA will lead to companies having to make considerable adjustments in compliance, contract design with supplier companies and purchasing. If internal company control procedures and risk assessment, especially to direct suppliers are not sufficiently adapted, a considerable liability risk may arise, which will be exacerbated by the future introduction of special civil liability under future European supply chain law. The paper gives an overview over the SCDDA and discusses strengths and weaknesses of the German legislation.