Back in July, we wrote about Germany’s plans to scale back its Supply Chain Due Diligence Act. Now the government has moved forward with that plan, and the German Ministry of Labour and Social Affairs has circulated a draft of the amendments. One major sticking point is the removal of reporting requirements and deferring to the EU’s Corporate Supply Chain Due Diligence Directive (CSDDD) for due diligence reporting. A recent Linklaters memo discusses these changes:
“The reporting requirements have always been considered particularly challenging, not only in view of the pending implementation of the CSDDD. Unsurprisingly, the Ministry states in its justification for the draft that it aims to prevent companies from facing excessive burdens during the transition period until the directive is transposed into national law.”
In addition to eliminating reporting obligations, the changes will also scale back the number of regulatory offenses under the law. The draft is expected to be adopted by the cabinet soon, and given the limited deadline for comments, changes are likely to be limited. Germany spearheaded supply chain due diligence, passing the law in June 2021. Now the German government seeks more uniformity with the rest of the EU by moving to the CSDDD as its primary mode of regulating supply chain due diligence. However, the future of the CSDDD is uncertain, as ongoing Omnibus reforms threaten to gut much of the law’s scope. Germany’s chancellor has even suggested repealing portions of the EU Directive.
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