In February 2022, the European Commission adopted its long-awaited proposal for a Directive on corporate sustainability due diligence [and amending Directive (EU) 2019/1937"; "EU Supply Chain Directive"). According to the draft, companies are to be obliged to carry out due diligence throughout their entire value chain and to include sustainability and human rights aspects in their business strategy. This is in line with the trend that has been going on for several years to no longer leave ESG issues to companies and consumers, but to establish binding regulations on human rights and environmental standards along global supply chains. In addition to the German Supply Chain Care Obligations Act ("Supply Chain Act") – which will come into force as early as 2023 – there are already supply chain laws in France, the Netherlands, Great Britain, Australia and the USA, for example. The planned EU Supply Chain Directive also applies to smaller companies, is intended to hold top management accountable and can lead to severe liability (fines and civil liability). Companies affected by the EU Supply Chain Directive should therefore prepare their business activities as well as their value chain for the EU Supply Chain Directive now. Although the EU Supply Chain Directive will not enter into force until 2024 at the earliest, the lead time until then is needed to take the necessary precautions within the company, otherwise there is a risk of civil liability, significant turnover-related fines and the exclusion of subsidies.
This article gives you an overview of the key points of the planned EU Supply Chain Directive that companies need to consider in relation to their global supply chains and explains how you can safely navigate this new legal framework and what you need to consider in order to prepare your company for the EU Supply Chain Directive now.
By Franz Kaps
