On 3 March 2021, the German government adopted a draft legislation on “corporate due diligence in supply chains” (the so-called Sorgfaltspflichtengesetz), which requires companies that fall under the scope of this law to take steps to prevent human rights violations throughout the supply chains. The draft law builds on the growing momentum across Europe driven namely by consumers, non-governmental organisations, the media, and investors towards improving corporate human rights and environmental performance.
The draft law will oblige German companies to set up a due diligence process covering not only the companies’ operations but also their direct suppliers. The latter might lead to an increase and tightening-up of requirements mirrored by additional policies, requests and/or the incorporation of contractual clauses to be accepted by Indian business partners and suppliers.
In this Publication, the IGCC takes a look what are the important elements proposed in the draft law and what are its possible impact on companies and suppliers in India and Germany