The Act on Corporate Due Diligence to Prevent Human Rights Violations in Supply Chains came into effect in Germany on January 1, 2023. This law places compliance obligations on German companies related to human rights violations in their global supply chains. The Act applies to companies with at least 3,000 employees and extends to direct and indirect suppliers in the supply chain. From 2024, it will also apply to companies with at least 1,000 employees in Germany. The Act requires German companies to mitigate the risks of human rights violations in their supply chains, including forced labor, child labor, and modern-day slavery. Compliance with the Act is monitored by the German Federal Office for Economic Affairs and Exchange Control, and non-compliance can result in significant fines. This law has implications for German companies operating abroad and foreign companies with branches in Germany, as contractual obligations related to the Act may be imposed on foreign suppliers. The Act reflects a growing trend of environmental, social, and governance (ESG) due diligence obligations globally, and companies operating in South Africa may also be affected by such legislation.
By FCCT Editorial Team