New Law For Companies Doing Business With German Companies Comes Into Force Jan 1 2023

BOULDER, Colo. - Aug. 18, 2022 - PRLog -- International Business Circle (IBCircle) announced that companies doing business with German companies need to be informed and prepared for the compliance implications of an important new law that comes into force on January 1, 2023.

Germany's new Act on Corporate Due Diligence in Supply Chains is a new German federal law passed by the Bundestag. It is part of the Civil Code as well as the Commercial Code and will enter into force on January 1, 2023. The law regulates the due diligence of German companies and their supply chains with regard to the observance of human rights and environmental protection.

It initially applies to all companies based in Germany (head office or branch) regardless of their legal form, with 3000 or more employees. From January 1, 2024, it will also apply to companies with 1000 or more employees.

This now means that all companies covered by this law are liable for violations of human rights as well as environmental protection in their own business; that of their direct suppliers; and that of their indirect suppliers. Due diligence further means that each affected company must (1) Designate a responsible person, (2) Issue a policy statement, (3) Establish a risk management procedure with respect to this law and immediately use it to (4) Conduct a risk analysis, (5) Define and implement preventive and remedial measures and review their (6) Effectiveness, and finally (7) Document and report everything.

Commenting on the new law, Germany-based IBCircle member, Juergen Thurner from xprts4xlnc, said: "We know that this will have a knock-on effect in terms of reporting and resources for all the companies involved in these German companies' supply chains. All these obligations are very reminiscent of the requirements of ISO 9001 management systems, so it can be assumed that the effort and scope of implementing the due diligence obligations of the Supply Chain Act will be similar to that of ISO 9001 certification. All of this must happen in the calendar year 2022. So companies that have not yet taken action in this regard will feel significant resource and time pressure here."

Thurner has written a white paper providing detailed information on this new law, its implications for companies and recommendations for action. He will be presenting his findings and answer questions at the IBCircle's briefing on September 8 at 10 AM MDT/12 Noon EST, virtually by Zoom (details at: https://conta.cc/3Ac3Zkn).

John A.K. Lowe, EVP, IBCircle Global Program, added: "This new German Law reminds me of what happened with CSR with Scandinavian companies in the 1990s. It created a whole new industry of consultants and CSR investigators worldwide."