Germany Passes Human Rights Due Diligence Law for Supply Chains
German companies must now take preventive measures to combat human rights violations in their supply chains, under law passed June 11. The regulation mandates compliance and reporting mechanisms on due diligence activities and sets a Jan. 1, 2023, deadline to come into full compliance for companies with more than 3,000 employees and a Jan. 1, 2024, deadline for companies with more than 1,000 employees. Companies with more than 400 million Euros in annual turnover can be fined up to 2%.
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Companies can prepare for these obligations by “integrating human rights into group policies and strategic planning processes,” disclosing how this integration is occurring, enacting a human rights impact assessment, reviewing any whistleblower programs and reviewing the extent the company is able to address supply chain risks, Mayer Brown said in a June 16 analysis. “Reviewing the role, resources and expertise of the legal and compliance functions, who should play a key part in addressing these new challenges,” will also be key, the analysis said.