Crypto News: Supply Lines: Germany’s new rules

Keeping global supply chains ethical and sustainable is a challenge. Germany, the world's third-biggest exporter, implemented a law in 2023 that aimed to do just that.

After about 5,700 companies were obliged to implement a strict risk-management and analysis system, complemented by a report obligation and the threat of fines of as much as €8 million ($8.7 million), European legislation known as CSDDD was approved in May to introduce and harmonize supply chain rules across the 27-nation bloc.

Since then, there have been discussions on how to implement the rule in German national law. Companies sounded alarm bells that they would face a double burden while NGOs warned that the German law should not be weakened.

While the European initiative has a wider scope of civil liability, it has been watered down to include companies with more than 5,000 employees.

Although firms with more than 1,000 employees and a total revenue of €450 million ($488 million) per year will be held accountable after five years, the legislation would reduce the number of already obliged companies under the German law by up to two-thirds now, according to the NGO Initiative Lieferkettengesetz.

New Details

On Wednesday, the German cabinet formally approved measures of the government's so-called growth initiative which include details on the implementation of the CSDDD into German legislation.

According to the economy ministry, the European law will be implemented within this legislative period and double reporting obligations will be prevented by suspending the original report duties foreseen by the German law. The reports for 2023 won't be due until the end of 2025.

While the CSDDD is not implemented into German law yet, these measures signal the direction the government will take in implementing the European law.

"The long-awaited agreement by the federal government is a positive signal," Tanja Gönner, managing director of the Federation of German Industries, said in a statement.

Meanwhile, the labor ministry is currently examining how to exactly implement the measures of the growth package, according to a spokesperson.

NGOs criticize the measures as breach of EU law. The CSDDD includes a proposition that the existing national standards should not be weakened by the law — which would happen should the German legislation be adopted as planned in the growth incentive, according to a statement of the NGO Germanwatch.

"The Federal Government is bowing to the business associations," said Heike Drillisch of the NGO Initiative Lieferkettengesetz in a statement.

Related Reading:

—Marilen Martin in Frankfurt

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