Amendment of the german law on due diligence in supply chains

The draft law amending the German Supply Chain Due Diligence Act -Lieferkettensorgfaltspflichtengesetz- (here in after LkSG) has recently been published. This amendment is motivated, among others, by the transposition of Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial information and diversity information by certain large companies and certain groups and the implementation of certain measures to protect and preserve human rights.

This amendment determines, among other things, a series of control mechanisms that allow the various German companies in the supply chain to check that their foreign suppliers – whether direct or indirect (§ 2, paragraphs 7 and 8) – do not violate certain quality standards, which will be developed in the future. The various mechanisms include, for example, carrying out a study to identify possible present and future risks in order to contribute to the assessment of the suitability of a foreign supplier (§ 2-10 LkSG). In this way, the companies involved in the supply chain are obliged to implement certain measures to avoid the occurrence of a possible risk [they are not required to avoid a specific result, as this is an obligation of means and not an obligation of result (§ 3, paragraph 1)].

The importance of implementing prevention measures lies in preventing companies involved in the supply chain from incurring liability as a result of their suppliers’ failure to comply with their obligations. It is therefore necessary to implement plans to ensure adequate compliance with the duty of care in order to avoid incurring liability (§ 3, paragraph 3).