Key dates:
Effective since January 2023
Applies to:
Companies with more than 3,000 employees based in Germany or German-registered branches of international companies from 2023. From 2024, it also applies to companies with more than 1,000 employees based in Germany or German-registered branches of foreign companies.
What it says:
The Act requires companies to establish a risk management system to identify, prevent, or minimise the risks of human rights violations and environmental damage in their supply chains. Companies must publish an annual report outlining their due diligence efforts. The legislation also extends due diligence obligations to indirect suppliers, ensuring that risks are addressed throughout the supply chain.
Penalty:
Violations of the Act may result in fines of up to €8million or up to 2% of annual global turnover. The fines system based on turnover applies only to enterprises with an annual turnover of more than €400million.