Germany approves due diligence legislation


On 11 June, the German Bundestag approved the due diligence law. This law introduces the obligation for large companies to conduct human rights and environmental due diligence along the whole supply chain.

The approval of this regulation helps Germany to transpose the “soft” obligations existing under the 2011 United Nations Guiding Principles on Business and Human Rights (the UNGP) – and reflected in a related German action plan on Business and Human Rights – into mandatory requirements. An earlier quantitative survey carried out in 2020, revealed that only 22% of the participating companies meet the due diligence requirements set by the German National Action Plan.

The new German law takes a two-step approach. It will apply to companies with more than 3,000 employees, including workers posted abroad as of 1 January 2023; businesses with more than 1,000 employees will fall under the scope of the legislation from the following year. The due diligence obligation consists of the dutie to analyse human rights-related risks, the adoption of measures to prevent and mitigate human rights violations, and the establishment of complaint mechanisms. Moreover, companies will have to report publicly on their due diligence activities.

Unfortunately, the regulation explicitly excludes civil liability for non-compliant companies, which means that victims of human rights violations residing in third countries will still face challenges in claiming compensation. However, German trade unions and NGOs will be allowed to represent victims of third countries before German courts, and companies will be subject to administrative fines.

The exclusion of civil liability fails to meet the expectations of civil society organizations, who advocated for the economic compensation to victims of human rights abuses, even in cases where such impacts occurred along global supply chains. Nonetheless, the approval of due diligence legislation in Germany represents a significant first step towards an increased level of  corporate accountability vis-à-vis vulnerable categories such as women, children and migrant workers.