Buschmann: No duplication of reporting obligations

The German government is planning to ease the burden on companies with regard to the controversial Supply Chain Act. The background to this is the cabinet's decision to implement an EU directive on sustainability reporting by companies. According to the CSR Directive, certain companies will have to report on the social and ecological impact and risks of their activities for the first time or to a much greater extent than before.

According to the Ministry of Justice, the aim is to avoid unnecessary duplication of reporting obligations. Companies that prepare a sustainability report in accordance with the CSR Directive should also fulfill their reporting obligations under the Supply Chain Sustainability Obligations Act.

"Reducing bureaucracy remains an urgent ongoing task"

The new regulations in accordance with the EU directive mean a drastic additional burden for companies, said Minister of Justice Marco Buschmann (FDP). However, the aim is at least to prevent duplication of work. "We have also agreed in the Federal Government that we will lobby the European Commission to significantly reduce the very extensive requirements regarding the content of sustainability reporting. Reducing bureaucracy remains an urgent and ongoing task."

In its growth initiative, the coalition had announced that it would avoid disproportionate burdens on companies when implementing due diligence and reporting obligations. The EU Supply Chain Directive is to be implemented with as little red tape as possible in this legislative period by amending German law.

EU directive provides for corporate liability

The German Supply Chain Act is already in force. Companies must take care to ensure that human rights are respected throughout the entire production process. Companies should be held accountable if they profit from human rights violations such as child or forced labor. The law has applied to companies with at least 1,000 employees since January 2024. However, business associations report that large companies are also asking many small suppliers about their compliance. One of the biggest differences between the German law and the EU directive is liability. The German law excludes the possibility of companies being liable for breaches of due diligence - the EU regulation allows this.