When the EU passed the Corporate Supply Chain Due Diligence Directive (CS3D), it had an eye towards raising the standards for supply chain management across the EU. Ironically, the new Directive is causing Germany, an early adopter of mandatory supply chain due diligence, to lower its national standards in anticipation of transposing the CS3D. Linklaters writes about the proposed changes to Germany’s Supply Chain Act stating:
“The regulatory framework governing corporate supply chain responsibilities in Germany is set for significant changes. The German government has announced plans to modify the Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz – LkSG) with a view to reducing bureaucratic burdens for companies and implementing the EU Corporate Sustainability Due Diligence Directive (CSDDD).”
Changes coming to the German Supply Chain Act include a reduction in scope and reducing the number of covered companies to less than a third of those currently covered. Additionally, a new grace period will be introduced shielding companies from enforcement under the German Supply Chain Act until January 1, 2025. The changes are also expected to reduce burdens on downstream companies by introducing new rules for how larger in-scope companies can request information from small and medium enterprises in their supply chains. Companies are anticipating that the CS3D will be a heavy lift across the board. Germany’s changes should help reduce compliance burdens that come from working with two different legislative schemes.
Our members can learn more about developments in supply chain management legislation here.
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