Due Diligence: German law to be cut back?

The German government plans to use the transposition of the EU’s Due Diligence Directive (CSDDD) to roll back some ‘overreaching” provisions in the Supply Chain Act and deliver a reduction of coverage and an easing in reporting requirements. They will face opposition from several NGOs.

Why it matters: The German government aims to reduce the number of companies covered by the Act and ease reporting requirements. However, it remains to be seen if this rollback will clash with the CSDDD goals… it will certainly face opposition from NGOs.

The big picture: There are also unconfirmed reports that the biggest political group in the European Parliament, the centre-right EPP, will also push for a slowdown on the rollout of the CSDDD out of concern about the burdens in places on businesses in scope.

The bottom line: What this case illustrates is the complex web of entanglements that can ensnare businesses within the scope of due diligence legislation. The “web” stretches from NGOs and activists, to home country trade unions, and trade unions in “third countries”, the EU term for countries that are not members of the EU.

It is not surprising that the EPP is calling for a reset.

ADDITIONAL INFORMATION:

Linklater report HERE. 

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Also... we found this example of what companies are currently struggling with under the Supply Chain Act. Not only do businesses have to deal with unions in their supply chain, but they also have to contend with activist groups and NGOs who seek to police company behaviour. 

KiK, a German textile retailer, is currently navigating allegations of non-compliance with the German Supply Chain Act that mandates companies to improve working conditions in their global supplier chains. The company is struggling to reach an agreement with Pakistan's local trade unions to safeguard workers' rights after alleged dismissals of workers critical of management practices. 

Femnet, a German women's rights organization, and the European Centre for Constitutional and Human Rights (ECCHR) also claim that temporary workers were terminated without being offered permanent contracts, which is required by law. The National Trade Union Federation (NTUF) and its German counterparts have suspended negotiations, citing the KiK's failure to meet its legal obligations. 

KiK has denied these allegations, citing two independent audits that found no evidence of misconduct. The company wants to keep channels open for dialogue but plans to seek partnerships with other unions in the absence of NTUF's cooperation.