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EU Corporate Sustainability and the German Supply Chain Act

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A. Introduction

The European Union (“EU”) has set the goal to transition all economic sectors to a climate-neutral and sustainable economy. Related efforts are not only limited to environmental issues, but also have human rights related objectives. Purpose of the mutual efforts are the implementation of certain social standards, such as labour conditions, minimum wage, etc. along the supply chains of European companies, as well as the establishment of certain environmental standards in corporate governance.

Under the slogan of ESG (Environmental, Social and Governance), the idea is that companies and investors shall not only focus on profits, but need to take environmental, social and governance factors into account when doing business. With respect to global supply chains, companies should not only aim at profiting economically from their international business relations, but also take responsibility for the rights of the workers and the environment abroad.

Already in 2011, the UN published the UN Guiding Principles on Business & Human Rights that required business enterprises to respect human rights[1]. One of the first pieces of legislation of the EU requiring supply chain due diligence was passed in 2017 relating to the wood industry and therefore was sector-specific only[2]. Thereafter these topics were much discussed in Europe, in particular on occasions such as the deforestation of tropical rainforests or the disaster of a fire and factory collapse in the Rana Plaza textile factory in Bangladesh in April 2013.

On 23 February 2022, the EU published a proposal (the “Proposal”) for a Directive on Corporate Sustainability (“Directive”). The Directive is yet to be approved by the European Parliament and Council. It is expected that the EU will adopt the Directive in 2023. Thereafter, the member states have a time frame of another two years to implement the Directive into their national laws. Therefore, the provisions are only expected to come into force in 2025.

Germany, however, already has adopted a statute on supply chain due diligence, namely the German Supply Chain Act (Lieferkettengesetz, herein “GSCA”) which was published on 22 July 2021 and will come into force on 1 January 2023. Compared with GSCA, the Proposal for the Directive has a broader scope and, if the Directive is enacted in its current form, would therefore extend the requirements for companies and their supply chains even further.

Considering the relevance and significance for Chinese companies, this article begins with an introduction of the Proposal, then focuses on the GSCA that will come into force at the beginning of 2023, which has more immediate consequences for Chinese companies. While the German market is the most important EU market for Chinese companies, it should also be mentioned that France has a similar statute already passed in 2017[3] and other EU member states either have more targeted law on certain aspects of supply chain due diligence [4] or are currently working on a more general national supply chain law (e.g., Belgium, the Netherlands, Luxembourg and Sweden).

B. EU Directive of the European Parliament and of the Council on Corporate Sustainability Due Diligence

While timing and content of the EU law regarding supply chain due diligence is still unclear, the Proposal gives a flavour of the direction that EU law will move towards in the next years. Though further amendments are to be expected, the Proposal is the first step in the legislative process only and the Proposal still must be approved by EU Parliament and Council and implemented into national laws of the member states.

Further, while an import ban for goods from forced labour is not part of the Proposal and the Directive, it is expected that the EU will publish a proposal for a separate law on this topic in autumn of 2022. The EU Commission is currently proposing an equivalent detailed concept. No details have become public yet. We can expect that the EU will not designate any particular states or regions in their draft [5]but will define a more general framework for the import ban for goods from forced labour.

Nevertheless, Chinese companies doing business with the EU are well recommended to monitor the EU legislation process and get prepared to be able to meet the requirements of their EU trading partners in the future. This is why this article gives a short summary of the Proposal.

I. Scope

1. Companies

According to the Proposal, the Directive shall apply to (i) EU companies with more than 500 employees and an annual net turnover of EUR 150 million (Group 1) as well as to (ii) EU companies operative in vulnerable sectors with more than 250 employees and an annual net turnover of EUR 40 million (Group 2). Vulnerable businesses include manufacture of textiles, leather and related products, agriculture, forestry and fisheries, and extraction of mineral resources (see Article 2, 1(b) of the Directive).

Furthermore, non-EU companies can be subject to the provisions if they are doing business in the EU and have (i) an annual net turnover of more than EUR 150 million within the EU or (ii) an annual net turnover of 40 to 150 million within the EU provided that at least 50 % of its global turnover was generated in one of the vulnerable sectors (Group 3)(see Article 2, 2).

2. Activities

The Directive shall apply to all activities related to the production of goods or the provision of services by companies, including the development of the product or service and the use and disposal of the product. Therefore, the Directive shall apply to the following complexes: (1) company’s own business area, (2) subsidiaries, (3) direct suppliers, (4) indirect suppliers if business relationship is permanent, (5) use of product, and (6) disposal of product[6].

II. Requirements and Measures

Companies will be obliged to implement a due diligence process that can identify actual and potential adverse impacts on environmental and human rights issues. The explanatory memorandum to the Proposal sets out that this encompasses the following steps: (1) integrating due diligence into policies and management systems, (2) identifying and assessing adverse human rights and environmental impacts, (3) preventing, ceasing or minimising actual and potential adverse human rights, and environmental impacts, (4) assessing the effectiveness of measures, (5) communicating, and (6) providing remediation.

In detail, Article 5 of the Proposal requires that the companies’ policies include a due diligence policy describing the company’s approach to due diligence, a code of conduct and the processes put in place to implement due diligence. Such policies must be updated annually.

Furthermore, companies shall identify actual and potential adverse human rights and adverse environmental impacts arising from the operations or relevant supply chains (Article 6 of the Proposal). Such “adverse impacts” are further described by referring to violations of various international human rights and environmental agreements listed in an Annex. Once identified, measures shall be taken to prevent potential adverse impact or bring to an end actual adverse impact, or where not possible, to mitigate or minimise such adverse impact (Article 7 and 8 of the Proposal). Relevant matters include a prevention or corrective action plan, contractual assurances, financial compensation, and investments, as well as industry initiatives. The Proposal even suggests concluding a contract with an indirect supplier with a view to achieving compliance. In practice, it will be difficult to get direct access to indirect suppliers just for the purpose of agreeing on certain compliance measures. As a means of last resort, namely if the adverse impacts could not be ended or minimised, the company shall refrain from entering into new or extending existing relations with the business partner concerned and shall, where the relevant law allows, suspend or terminate the business relationship.

The Proposal further provides for a complaint procedure along the whole supply chain not only for persons affected by an adverse impact, but also for trade unions or civil society organisations (Article 9 of the Proposal). It is to be expected that trade unions and NGOs from the EU will use these procedures as means to prosecute and make public certain business practices of non-EU (including Chinese) suppliers that are considered having adverse impacts under the Proposal. The remedies system must provide a timeline for actions and indicators for measuring improvements (Article 7 of the Proposal).

All measures and efforts under the Directive shall be monitored and assessed annually or on an ad hoc basis (Article 10 of the Proposal) and shall be reported in an annual statement published on the companies’ website (Article 11 of the Proposal).

Large companies exceeding the EUR 150 million threshold (as set out above) and therefore subject to the Directive shall adopt a plan to ensure that their business activities are in harmony with the transition to a sustainable economy and the limiting of global warming in line with the Paris Agreement on climate change (Article 15 of the Proposal).

Non-EU companies subject to the Directive shall appoint an authorised representative in an EU member state where the relevant non-EU company operates to monitor the compliance system and communicate with the authorities (Article 16 of the Proposal). We would expect that such EU representative will have a similar role as the EU representative under the EU General Data Protection Regulation and act as point of contact in the EU for the non-EU company.

III. Sanctions and Liability

The Directive requires implementation by each member state so that the sanctions for violations will differ from one member state to another. Sanctions shall be adjusted on a case-to-case basis taking into account the company’s efforts to comply with the remedial action and the efforts which have been made prior to the violation. In case of monetary sanctions i.e., in cases of a misdemeanour or administrative offense, the annual turnover of the company shall serve as a calculation basis.

Remarkably and in contrast to the GSCA, the EU Directive provides for civil law liability (Article 22 of the Proposal). Companies shall be liable for damages if they fail to comply with the obligations to prevent or bring an adverse impact to an end, such adverse impact occurred and led to a damage. As such civil liability was discussed but eventually rejected when the GSCA was adopted in Germany, it will be interesting to follow up when and in what form such civil liability provisions will be implemented into national German law.

IV. Impact on Chinese Companies

A few large Chinese companies will be directly subject to the Directive because their EU business either exceeds the general turnover threshold of an annual net turnover of EUR 150 million in the EU or, if 50% or more of the worldwide turnover is generated in a vulnerable business, the lower turnover threshold of an annual net turnover of EUR 40 million in the EU (see above at B.I.1). The Proposal limits the obligations to identify adverse impacts for companies that do not meet the general turnover threshold, but only the lower turnover threshold for vulnerable businesses, to severe adverse impacts in such vulnerable business (Article 6 (2) of the Proposal). However, the Proposal does not limit the obligations to the EU business of the non-EU company so that, at least under the Proposal, such large Chinese companies that are directly subject to the Directive will also be obliged to meet the requirements of the Directive with respect to their non-EU business.

While there will only be a few Chinese companies directly subject to the Directive, the impact on Chinese companies will be much broader as many Chinese companies will be affected in their role as the supplier of a European customer and be subject to the mandatory due diligence exercise of their European business partner. Before replying to any due diligence requests from such European business partners, Chinese companies are well advised to become familiar with the European law on supply chain due diligence.

C. German Supply Chain Act

The GSCA had already passed the German legislator and was published on 22 July 2021, a few months prior to the Proposal at the EU level.

In Germany, the GSCA has faced a lot of criticism either because it does not go far enough or because it is too far-reaching. Typically, the media complains that the GSCA is not assertive or extensive enough, as many would have liked to see an import ban on goods that were produced or manufactured in a way that violates GSCA standards or wanted to impose a civil liability in case of violation on the companies concerned.

On the other hand, legal scholars have criticized the vagueness of the obligations that makes compliance with the GSCA standards difficult[7] or its contentiousness under constitutional law as it makes companies responsible for actions of third parties (i.e., their suppliers)[8]. Industry representatives further pointed to the fact that the GSCA creates massive challenges for medium-sized companies that have less influence on supply chains due to limited resources and less market power[9]. The latter point was taken into account so that the GSCA only applies to larger companies.

I. Scope

In essence, the GSCA obliges German companies to analyse whether certain human rights and environmental standards are complied with along their supply chain. The law initially applies to German companies (or German branches of foreign companies) with more than 3,000 regular employees in Germany. From 2024, the scope will extend to German companies and branches with more than 1,000 employees. For calculation purposes within a group of companies, the employees of all group companies working in Germany or sent abroad, are to be taken into account (Sec. 1 (3) GSCA). Employees employed by foreign subsidiaries of German companies are not counted.

While the GSCA is not directly applicable to smaller companies and to non-German companies, it may still concern the latter as suppliers of the companies subject to GSCA, because they may have to report to their customers being subject to the GSCA on compliance with the relevant protection standards. Further, we expect smaller German companies sourcing from China will follow on a voluntary basis as recommended by the German Chamber of Commerce in China.

Different from the Proposal, the GSCA does not differentiate between vulnerable and less vulnerable industries, although its impact will be bigger in vulnerable industries. According to a study the following industries can be described as “vulnerable” industries: (1) automotive, (2) chemistry, (3) electronics, telecommunications and digital, (4) energy supply, (5) financial services, (6) wholesale and retail, (7) metal, (8) mechanical engineering, (9) food and beverages, (10) textile and leather, and (11) tourism and leisure[10].

II. Protected Legal Positions

The human rights and environmental standards to be complied with are listed in Sec. 2 of the GSCA. First of all, basic human rights-related due diligence obligations have to be observed (Section 2 (2) GSCA), such as the prohibition of child labour and forced labour, the observance of minimum standards in occupational/industrial safety and the payment of locally appropriate minimum wages.

In addition, specific environmental standards must be met (Sec. 2 (3) GSCA). These include a ban on the production, use and discharge of mercury and certain other chemicals banned under the Minamata or Stockholm Conventions, waste disposal in accordance with the Stockholm Convention, and a ban on the export or import of waste in violation of the Basel Convention.

While the GSCA does not intend to implement German social standards worldwide, it aims to ensure compliance along the supply chain with minimum international standards. Therefore, for many standards, the GSCA does not provide for its own protected standards in the law, but rather refers to those in international agreements and conventions. Consequently, the scope of obligations is often not sufficiently specified, making corporate compliance an even bigger challenge.

III. Required Measures

Regarding the required measures, the GSCA differentiates between the company’s own business area, direct suppliers, and indirect suppliers. The company’s own business area includes activities both in Germany and abroad and covers the activities of subsidiaries that are under determining influence of the German company concerned (cf. Sec. 2 (6) GSCA).

The specific obligations may differ from case to case considering the business sector, the market position of the company, the possibilities for influence and the overall risk circumstances (cf. Sec. 3 (2) GSCA). In practice, the required actions must follow the legal principle of “appropriateness” i.e., the higher the risks and the bigger the potential influence, the stricter the requirements.

1. Risk Management and Analysis

In its own business area (eigener Geschäftsbereich), the company must set up a risk management system covering all relevant business processes, appoint a responsible person (e.g., Compliance Officer, Human Rights Officer) and carry out regular and ad hoc risk analyses (Sec. 4 and 5 GSCA). This also includes a complaint system for reporting violations of the GSCA standards not only within the company's own area of business but also with respect to direct or indirect suppliers (Sec. 8, 9 (1) GSCA). The management of the company must review the work of the responsible person annually and remain informed about potential risks and violations.

2. Preventive Measures and Policy Statement

Any company subject to the GSCA shall issue a policy statement on its human rights strategy that describes expectations and processes that shall apply to its own business area and vis-à-vis direct suppliers (Sec. 6 (2) GSCA).

Procurement strategies and purchasing practices are to be developed and implemented in the company’s own business with the purpose to identify, avoid and reduce risks. In business areas that are imposed to relevant risks, training shall take place. For large projects or “big players”, the initiation of a third-party audit can be considered. Finally, there shall be control measures to review compliance with the policy statement (Sec. 6 (3) GSCA).

The human rights and environmental expectations must also be considered when selecting the direct supplier. The companies concerned are required to contractually obligate their direct suppliers to comply with the standards and to address them appropriately along the supply chain. These preventive measures are flanked by training of the direct suppliers and the agreement of contractual control mechanisms (Sec. 6 (4) GSCA). The effectiveness of the measures must be reviewed annually and on an ad hoc basis. (Sec. 6 (5) GSCA). An ad hoc review is required, e.g., if there is a substantial change in the business such as new products are placed on the market or new business areas are explored.

3. Remedial Actions

In the event of an actual or imminent breach of the standards of the GSCA in the company's own business area or at a direct supplier, the company is obliged to take remedial actions without undue delay (Sec. 7 (1) GSCA). In a first step, the company shall evaluate and prioritize the risks and violations. In a second step, the management shall be informed, and a step-plan shall be developed.

In the own business area of the company subject to the GSCA, the remedial measures must result in the complete termination of the GSCA violation without any exceptions. The benchmark, however, is not as strict for foreign subsidiaries or other affiliates of the company concerned. For such entities, the remedial action imposed only need to ensure that violations are terminated “in general” (Sec. 7 (1) GSCA).

In the event of a breach of duty in the business area of a direct supplier, the company concerned shall (i) develop and implement plans to remedy or at least minimize the violation, (ii) launch industry initiatives i.e., act with other “global players” of the same industry to set certain industrial standards, or (iii) temporarily suspend the business relationship (Sec. 7 (2) GSCA). A termination of the business relationship is only required as a measure of last resort if there is no other remedy (Section 7 (3) GSCA). The effectiveness of the remedial measures shall be reviewed annually and on an ad hoc basis (Sec. 7 (4) GSCA). If the supplier relationship extends to different business areas, however, it is unclear whether a violation in one business area requires the German customer to apply such measures to the full supplier relationship or only to the supplier’s business area in which the violation occurred[11].

In case of a violation in the business area of an indirect suppliers, the company is only obliged to act on an ad hoc basis. Remedial measures are only to be taken if the company has substantiated knowledge of a violation of the GSCA standards which requires verifiable and credible information.

4. Documentation

Finally, the GSCA not only requires the implementation of measures, but also contains considerable documentation and reporting obligations. The GSCA, for example, requires the retention of reports and documents as well as publication on the website for seven years and the submission of reports to the authorities (Sec. 10, 12 GSCA).

This is also flanked on EU level by the Directive on Corporate Sustainability Reporting[12] that also sets out reporting obligations for certain companies that will supplement the reporting obligations under the GSCA. Such directive is expected to apply for the first time in 2024 for the reporting of the financial year 2023[13] and will amend and enhance existing reporting obligations under EU law.

IV. Sanctions

1. Fines

Non-compliance with the GSCA can have serious consequences. The GSCA provides for fines of up to EUR 800,000 or, for companies with an annual turnover of more than EUR 400 million, up to 2 % of the annual global turnover per violation (Sec. 24 GSCA). If the fine exceeds EUR 175,000, the fine will result in the affected company being banned from participating in public tenders for up to three years (Sec. 22 GSCA).

The specific assessment of the fine depends on the severity of the violation. In this context all pro and contra aspects shall be balanced by the competent authority. Efforts of the company concerned to detect the offence or to repair the damage shall be positively taken into account when determining the fine.

2. Competent Authority

Compliance with the GSCA standards is monitored by the Federal Office of Economics and Export Control (BAFA). It is to be expected that the BAFA not only will carry out investigations on an ad hoc basis but also without cause relating to companies that are operative in “vulnerable” sectors. This includes the entry to company premises, “search-like” activities and, in case of opening of proceedings, all means that a public prosecutor could perform in case of a prosecution regarding a criminal offense e.g., seizure of documents, witness interrogation, etc. (see Sec. 14 et seq. GSCA).

3. Role of Trade Unions and NGOs

In addition, trade unions and NGOs will also have a standing to initiate litigation proceedings in Germany in case of serious violations to enforce the rights of an injured person (Sec. 11 GSCA). Therefore, companies must consider reputational damages in the public, when associated with human rights or environmental violations. It is noteworthy that German courts will be competent for such court litigation, as the company concerned has its registered office in Germany. However, according to the German conflict of laws rules, the court will mostly have to apply foreign law, as the violation occurred outside of Germany. Therefore, the home country’s law of the injured person would apply.

Note, however, that – in deviation from the Proposal on EU level – the GSCA explicitly states that any violation of the obligations under the GSCA as such does not trigger civil liability (cf. Sec. 3(3) GSCA).

V. Impact on Chinese Companies

Chinese companies can be affected by the GSCA in various ways.

1. German branches of Chinese companies

Firstly, German branches of foreign companies with more than 3,000 (or, as of 1 January 2024, 1,000) employees in Germany are directly affected. We would expect this to have little to no practical relevance as most big Chinese companies in Germany operate by German subsidiaries. In the (unlikely) scenario, the GSCA would not only apply to the German branch, but also to the Chinese company.

2. German subsidiaries of Chinese companies

Secondly, the German subsidiaries of Chinese companies are subject to the GSCA under the same circumstances as other German companies. If they exceed relevant employee thresholds in Germany, the GSCA will apply to them directly. We would expect this to be of little relevance either because most German subsidiaries of Chinese companies will not have more than 1,000 employees either working in Germany or sent abroad by the German subsidiary. However, in this scenario we would not expect the GSCA to apply to the Chinese parent company (unless and to the extent the Chinese parent company is a supplier to the German subsidiary).

3. Chinese subsidiaries of German companies

Thirdly, Chinese companies will be affected if they are subsidiaries (or branches) of German companies. We expect this to apply to many big German companies present in China. The GSCA obliges German companies to apply the standards of GSCA to their own business area that, however, includes the business of their Chinese subsidiaries that are under determining influence of the German company. The term “determining influence” is not defined in the GSCA itself, but the legislative material indicates that it is to be defined broadly[14]. The determining influence considers factors including economic, personnel, organisational and legal ties between the German company and its foreign subsidiary. An overall review of the above aspects is to be taken, which will of course lead to uncertainty in practice. Indications include, inter alia, that a majority of shares of the Chinese company is owned by the German company, the existence of a group-wide compliance policy, the control on supply chain management and dual mandates in management positions. For these so-called German companies in China, the German Chamber of Commerce in China has provided a template for the “Code of Conduct for Sustainable Supply Chains in China”  [15]that should help to meet the requirements of the GSCA in China but requires adaptation to the specificities of certain industries and business fields.

4. Chinese companies as suppliers of German companies

Finally, and most importantly, the GSCA will affect Chinese companies as suppliers to German customers. This is because the German customers need to perform due diligence along their supply chain and implement the prevention measures and remedial actions as provided for in the GSCA and as described above in order to meet the legal requirements of the GSCA.

In general, German companies or subsidiaries of German companies in China not only have to comply with the standards of the GSCA themselves but will also be obliged to approach their suppliers to review whether such suppliers meet the requirements of the GSCA. There will be annual reviews and reviews on certain occasions (e g., launch of new products). German companies or their subsidiaries in China will ask direct suppliers to confirm compliance with relevant standards and implement control mechanisms in the supply contracts.

In the longer run, it is to be expected that the level of compliance with the standards set by the GSCA will influence the choice of the suppliers so that compliance with the standards will become a competitive advantage when dealing with German customers.

Although certain fines will be imposed against the German company, these fines indicate that German companies will take their obligations under the GSCA seriously. Further, the efforts to detect the offence will reduce fines for a German company, so that the German customer will make and document such efforts to be able to demonstrate such efforts to the authorities in case any investigations are launched.

In addition, trade unions and NGOs are also entitled under the GSCA to initiate litigation in Germany in case of serious violations. Special attention should be paid to their opinions and on Chinese suppliers.

Therefore, Chinese companies are well advised to prepare in advance and be ready to show their German customers that they meet respective requirements and are a valuable business partner. It is to be noted that suppliers from the province of Xinjiang are currently under special scrutiny by German (and other European) companies that are concerned about fines and reputation because there have been NGO reports on forced labour issues in this region discussed in the media. Therefore, under the premise of strictly abiding by the laws and regulations of China, Chinese companies from this region should be prepared that they will be asked to provide proof that their products do not stem from forced labour.

D. Comparison and Conclusion

While both the Proposal on EU level as well as the GSCA in Germany follow the same goals and purposes, there are still some major differences – apart from the fact that the GSCA has already been enacted and will enter into force on 1 January 2023 while the Proposal is still under discussion in the legislative process.

While the GSCA only applies to German companies (so that only German companies can become subject to fines), the EU Directive is also applicable to non-EU companies with a considerable turnover in Europe. A significant difference lays also in the different categorization of the entities based on company size. While the GSCA in its first stage is only applicable to companies with 3,000 employees or more, the EU Directive is already applicable to companies with 500 employees. Further, the GSCA is only applicable to the own business area of the company concerned as well as to the direct, and (in a more limited way) to the indirect suppliers, while the Proposal imposes obligations broadly on the company and its business relations. A further major difference is that the Proposal contains the civil liability that was not included in the GSCA after vivid discussions at national (German) level.

Considering the imminent entry into force of the GSCA and the foreseeable additional legislation on EU level, Chinese companies are well advised to get prepared for supply chain due diligence by their EU business partners. While certain EU companies already had done supply chain due diligence in the past on a voluntary basis, we expect that such efforts will be intensified to the next level, and EU companies will send out questionnaires and start discussing the compliance with the standards of the GSCA and the Proposal with their Chinese suppliers. By diligently documenting their efforts undertaken on the implementation of such standards, companies aim to avoid sanctions without having to change suppliers.

For Chinese companies with EU customers, we recommend the following actions:

  • Review and analyse the own business as well as the business of the suppliers (that are indirect suppliers to German customers) to ensure that all required standards are met.
  • Contact the EU customers and discuss a solution how to best comply with the requirements under the new law.
  • Adopt a report or compliance statement tailored to the EU customers on dedication to human and environmental rights.
  • Establish and implement proper due diligence and corporate compliance measures to ensure conformity along the supply chain.
  • Install a proper monitoring department which analyses the running business operation and updates the relevant procedures and step plans.
  • Abide by China's Anti-Foreign Sanctions Law and other countermeasures laws and regulation while fulfilling compliance obligations under EU laws.

A proactive and preventive approach can lead to a market advantage and avoid bad surprises, i.e., sanctions or criticism from the public and the media. These measures also show to EU customers  Chinese company’s awareness of the international rules. The solution agreed with one EU customer can be promoted to other EU customers.

As the GSCA is sometimes very vague, it is difficult to determine which practices can be tolerated and when a standard is violated. Market standards will only emerge over time once an administrative procedure has been developed by the authorities so that companies are well-advised to study and follow recommendations from the Chambers of Commerce or industry organisation.

In the longer term, it is to be expected that the degree of compliance with the relevant standards will noticeably influence the business relationships between EU and Chinese companies. Compliance with the relevant standard will represent a competitive market advantage for Chinese companies when doing business with their EU customers.

The future will show what role the GSCA, and the Directive will have on business relationships between China and the EU. In any event, not only legal, but also economic and political factors will determine such role.

Please refer to https://www.ohchr.org/sites/default/files/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf

EU Regulation 2017/821 (Supply Chain Due Diligence Obligations for Union Importers or Tin, Tantalum and Tungsten, their Ores, and Gold originating from conflict-affected and high-risk areas) and EU Regulation 995/2010 Obligations of Operators who place Timber and Timber Products on the Market Text with EEA relevance).

Note that France also has a national law on supply chain due diligence (LOI n° 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d'ordre).

The Netherlands, for example, has introduced a more targeted law on child labor (Wet zorgplicht kinderarbeidm) in 2019.

This is different from the US that enacted the Uyghur Forced Labor Prevention Act (Pub. L. 117-78 (2021)) banning the import of goods from Xinjiang Uyghur Autonomous Region based on a (rebuttable) presumption that such goods were made with forced labour.

See Karl Würz, EU-Richtlinie zur Corporate Sustainability Due Diligence, published at https://www.haufe.de/compliance/recht-politik/eu-richtlinie-corporate-sustainability-due-diligence_230132_563512.html (referred to on 28 April 2022).

See: Keilmann/Schmidt: Der Entwurf des Sorgfaltspflichtengesetzes – Warum es richtig ist, auf eine zivilrechtliche Haftung zu verzichten, WM 2021 Heft 15, 717 (719) with further references.

See: Ekkenga/Schirrmacher/Schneider: Offene Fragen zur rechtlichen Steuerung nachhaltigen Unternehmertums, NJW 2021, 1509 (1513) with further references.

See the statement of the BDI (Bundesverband Deutscher Industrie – the Voice of German Industry) at https://bdi.eu/artikel/news/entwurf-droht-unternehmen-zu-ueberfordern/

Bundesministerium für Arbeit und Soziales, Forschungsbericht 543, Die Achtung von Menschenrechten entlang globaler Wertschöpfungsketten Risiken und Chancen für Branchen der deutschen Wirtschaft, p.19, Juli 2020.

See: Charnitzky/Weigel, Die Krux mit der Sorgfalt, RIW 2022, 12, 14.

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting, COM/2021/189 final of 21 April 2021.

See KPMG (Goron Mazar), Corporate Sustainability Reporting Directive (CSRD), at https://home.kpmg/de/de/home/themen/uebersicht/esg/corporate-sustainability-reporting-directive.html.

See Deutscher Bundestag – Drucksache 19/30505 of 9 June 2021, p. 37

See German Chamber Template for a “Code of Conduct for Sustainable Supply Chains in China” in Chinese and English language at https://china.ahk.de/de/news/news-details/german-chamber-template-for-a-code-of-conduct-for-sustainable-supply-chains-in-china

Reference

  • [1]

    Please refer to https://www.ohchr.org/sites/default/files/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf

  • [2]

    EU Regulation 2017/821 (Supply Chain Due Diligence Obligations for Union Importers or Tin, Tantalum and Tungsten, their Ores, and Gold originating from conflict-affected and high-risk areas) and EU Regulation 995/2010 Obligations of Operators who place Timber and Timber Products on the Market Text with EEA relevance).

  • [3]

    Note that France also has a national law on supply chain due diligence (LOI n° 2017-399 du 27 mars 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d'ordre).

  • [4]

    The Netherlands, for example, has introduced a more targeted law on child labor (Wet zorgplicht kinderarbeidm) in 2019.

  • [5]

    This is different from the US that enacted the Uyghur Forced Labor Prevention Act (Pub. L. 117-78 (2021)) banning the import of goods from Xinjiang Uyghur Autonomous Region based on a (rebuttable) presumption that such goods were made with forced labour.

  • [6]

    See Karl Würz, EU-Richtlinie zur Corporate Sustainability Due Diligence, published at https://www.haufe.de/compliance/recht-politik/eu-richtlinie-corporate-sustainability-due-diligence_230132_563512.html (referred to on 28 April 2022).

  • [7]

    See: Keilmann/Schmidt: Der Entwurf des Sorgfaltspflichtengesetzes – Warum es richtig ist, auf eine zivilrechtliche Haftung zu verzichten, WM 2021 Heft 15, 717 (719) with further references.

  • [8]

    See: Ekkenga/Schirrmacher/Schneider: Offene Fragen zur rechtlichen Steuerung nachhaltigen Unternehmertums, NJW 2021, 1509 (1513) with further references.

  • [9]

    See the statement of the BDI (Bundesverband Deutscher Industrie – the Voice of German Industry) at https://bdi.eu/artikel/news/entwurf-droht-unternehmen-zu-ueberfordern/

  • [10]

    Bundesministerium für Arbeit und Soziales, Forschungsbericht 543, Die Achtung von Menschenrechten entlang globaler Wertschöpfungsketten Risiken und Chancen für Branchen der deutschen Wirtschaft, p.19, Juli 2020.

  • [11]

    See: Charnitzky/Weigel, Die Krux mit der Sorgfalt, RIW 2022, 12, 14.

  • [12]

    DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2013/34/EU, Directive 2004/109/EC, Directive 2006/43/EC and Regulation (EU) No 537/2014, as regards corporate sustainability reporting, COM/2021/189 final of 21 April 2021.

  • [13]

    See KPMG (Goron Mazar), Corporate Sustainability Reporting Directive (CSRD), at https://home.kpmg/de/de/home/themen/uebersicht/esg/corporate-sustainability-reporting-directive.html.

  • [14]

    See Deutscher Bundestag – Drucksache 19/30505 of 9 June 2021, p. 37

  • [15]

    See German Chamber Template for a “Code of Conduct for Sustainable Supply Chains in China” in Chinese and English language at https://china.ahk.de/de/news/news-details/german-chamber-template-for-a-code-of-conduct-for-sustainable-supply-chains-in-china

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