The new German law has regulatory ramifications worldwide, particularly for suppliers to German companies, but more importantly, to ensure that human rights in their business supply chains are enforced by companies that they believe will benefit them. It is foretold to articulate repeatable ESG criteria to protect. Not by creating the world’s problems, but by solving them.
As an example of the breadth of this law, which has been widely cited in the German media, a German newspaper reported that a mine in the Congo, a source of cobalt for EV batteries, where Volkswagen buys batteries from Chinese battery makers may have posted information about human rights violations in In the case of the law, Volkswagen is required to carry out a risk analysis of his chain of supply.
It has been suggested that other countries should follow Germany’s lead, but there appears to be little political will for governments to do the right thing in this era when global supply chains traverse the flat earth.
In this way, companies have the opportunity to lead people the way they want or need, the so-called Platinum Rule (a twist on the Golden Rule, treating people the way you want to be treated). Moral advocacy for not doing everything in our power to end human rights abuses, including over 50 million people living in modern-day slavery.
Lieferkettensorgfaltspflichtengesetz (LkSG) or Act on Corporate Due Diligence in Supply Chains (Supply Chain Due Diligence Act) entered into force on January 1, 2023. The purpose of supply chain due diligence legislation is to effectively protect human rights and the environment in the global economy (but for the purposes of this post, we will focus on human rights prohibitions). Appropriate measures to respect human rights and the environment within the supply chain “with the aim of preventing or minimizing human rights- or environment-related risks or ending violations of human rights- or environment-related obligations”, Article 1, §§ 1, 3 of the Supply Chain Due Diligence Act. This law is much broader. A human rights risk is defined as “a situation where, based on facts, it is probable that any of the following prohibitions will be violated”.
- Employment of children under the age of 15 is prohibited.
- Prohibition of the worst forms of child labor for children under the age of 18. ILO Convention on the Worst Forms of Child Labor, 1999 (No. 182).
- Prohibition of forced labor.
- Prohibition of all forms of slavery or similar practices of workplace domination or oppression.
- Prohibition of disregarding applicable local regulations on workplace safety and working conditions where this may lead to workplace accidents or work-related health risks.
- Prohibition of disregard for freedom of association.
- Prohibition of Employment Discrimination.
- Prohibition of wage discrimination.
- Harmful noise production that seriously impairs natural resources necessary for the preservation or production of food, denies access to drinking water, destroys or obstructs access to sanitation facilities, or has a detrimental effect on human health. , or prohibition of causing excessive consumption of water.
- Unlawfully evicts or uses land, forests or water from which a person who acquires, develops or otherwise uses land, forests or water depends on such land, forests or waters; Prohibition of depriving them of their lives.
- Negotiate a ban on entrusting or using security forces to protect business projects due to lack of control when security forces prohibit torture, harm to life or limb, or interfere with freedom of association and rights of associations.
- Prohibition of acts or omissions which, taking into account all circumstances, may directly prejudice protected legal interests in a particularly grave manner and whose unlawfulness is evident, § 2, paragraph 2.
Companies covered by this law (including many American companies that supply goods and services to German companies) must not only establish risk management systems, but also undertake certain due diligence measures to protect human rights, including: the need to set up diligence procedures. A violation has already occurred or is imminent. Establish due diligence procedures for risks associated with indirect suppliers that apply if the company demonstrates knowledge of a violation. It documents the company’s due diligence procedures, risks identified and actions taken, and publishes an annual report on its website. This should be free and open to the public, § 3.
Companies can be fined. Large companies with a global annual turnover exceeding €400 million (approximately US$475 million) will have to pay fines of up to 2% of global annual turnover. (§ 24.) Furthermore, companies fined a minimum of €175,000 (approximately US$208,000) may be barred from public procurement for up to three year, § 22.
A company violating this law does not incur civil liability, § 3, paragraph 3, but a person’s “most important legal interests” protected under one of several international agreements have been violated. If so, the person may have a non-governmental agency or trade union bring a lawsuit on his or her behalf, § 11. Such protected most important legal interests include life and limb.
The UK has modest anti-modern slavery legislation, and while California has enacted significantly curtailed legislation (with legislation pending in Canada), there is little understanding by governments.
As business thinks of human rights in 2023, Turfon’s 1st-century rabbinical paraphrase says, “It is not your responsibility to complete the work of mending the world, but neither are you free to stop doing it.” We strongly believe that companies are more than pursuing the S of ESG. This new German law provides a guide for all organizations on how to research and evaluate their business practices, including their supply chains.
We can help your business comply with this and other human rights laws. More than that, we are happy to share practical steps and best practices in the fight against modern slavery as you work for companies that want to be one of the winning companies of the future. to mend the world.