Following the EU parliamentary elections, the German Supply Chain Due Diligence Act (LkSG) is once again on the move. As the FAZ reports, Federal Economics Minister Robert Habeck (Green Party) wants to suspend the German Supply Chain Due Diligence Act: "We can pause the law now - also with a view to what will then be implemented nationally at European level at some point in two years' time". The statement comes as a surprise, as the opposition's last motions to pause or even abolish the LkSG were previously rejected (trade-e-bility reported on the rejection of the Supply Chain Act abolition).
In light of the fact that the EU Supply Chain Directive (CSDDD) has been adopted shortly before the EU elections, many companies are having doubts about selected requirements of the German LkSG. In a recent press release, the VDMA industry association argues the balancing act between the LkSG and the CSDDD, which is also in favour of suspending the LkSG and implementing the EU directive in a practical manner. According to a report by Euronews, the EU Commission itself also stated with regard to the EU Supply Chain Directive "that the aim is to avoid companies in the EU's internal market having to deal with multiple, potentially incompatible national regulations."
The CDU/CSU parliamentary group in the Bundestag is now calling for the Supply Chain Act to be repealed for German companies and, to this end, formulated draft bill 20/11752 on 12 June 2024 for a law to repeal the law on corporate due diligence obligations to prevent human rights violations in supply chains - "Lieferkettensorgfaltspflichtenaufhebungsgesetz (Supply Chain Due Diligence Cancellation Act)". Few words could be more symbolic of bureaucracy in Germany. The CDU/CSU justify their initiative accordingly: "The European Supply Chain Directive (CSDDD) adopted by the European Parliament in April 2024 goes even further than the German provisions, which is why it makes no sense to expect companies to adhere to national regulations and at the same time prepare for the provisions of the European Supply Chain Directive."
The German Institute for Human Rights is against the repeal of the Supply Chain Due Diligence Act and argues: "Companies that have already invested in their risk management processes as part of the implementation of the LkSG, and there are already many of them, should not be penalised now."
In this context, a statement by the German government regarding the reasons for Germany's abstention from the EU Supply Chain Act (trade-e-bility reported) in an answer (20/11359) to a minor interpellation (20/11056) by the Left Party group is revealing: "In response to the MPs' question as to whether the German government plans to adapt the national Supply Chain Duty of Care Act to the now existing European law, the answer states that the need to implement the EU directive will be examined and addressed within the German government over the next two years."
There is also uncertainty about the background to the replacement of the President of the Federal Office of Economics and Export Control (BAFA) by Economics Minister Robert Habeck, as reported by tagesschau.de. The BAFA employs over 1,000 people and is responsible for tasks in the field of foreign trade and economic promotion for the federal government. This also includes monitoring the Supply Chain Act. Under the leadership of the outgoing president, a special branch office was set up for this purpose in Borna, Saxony, which employs around 100 staff. According to BAFA circles, the change is not related to Habeck's comments.
The debate surrounding the LkSG makes it clear: politicians and companies are preparing for the EU Supply Chain Directive (CSDDD / CS3D). Companies affected should already be focussing on this now.
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