31.05.2023
SME study on the Supply Chain Due Diligence Act published
Small and medium-sized enterprises in Germany are in favour of the rapid introduction of a European Supply Chain Due Diligence Act. This is the conclusion reached by the Hamburger Stiftung für Wirtschaftsethik in a study published today, shortly before the vote in the European Parliament on the Corporate Sustainability Due Diligence Directive (CSDDD). Thirty-nine companies were surveyed regarding the implementation of the German Supply Chain Due Diligence Act (LkSG).
The general openness shown by businesses towards national and EU legislation is surprising, given that the political debate surrounding the scope of the Supply Chain Due Diligence Act had been highly contentious. Throughout the debate, trade associations at both German and European level had pointed out that statutory regulation would place an excessive burden on small and medium-sized enterprises, given the high level of red tape and the additional financial strain.
“However, the reality for businesses appears to be completely different,” said Dr Miriam Putz, one of the authors of the study. “Rather than complaining about additional burdens, companies are responding pragmatically and, in most cases, adapting existing systems – often from the environmental sector – as best they can to the new requirements.” This applies even to businesses that are not covered by the law at all due to their size, as they too have long been faced with the need to fulfil their human rights due diligence obligations as a result of customer demands.
Nevertheless, the implementation of the Supply Chain Due Diligence Act entails significant burdens for small and medium-sized enterprises. Company representatives voiced criticism in particular regarding existing legal ambiguities. However, the prevailing view amongst businesses is that the Supply Chain Due Diligence Act is indispensable for achieving tangible improvements in the human rights situation on the ground. In China in particular, companies face significant hurdles in fulfilling their due diligence obligations. “The interviews revealed that a whole range of business models are under scrutiny there,” said Dr Miriam Putz.
The German Supply Chain Due Diligence Act was passed in 2021 and came into force on 1 January this year. The European Parliament is due to vote on the draft European Supply Chain Due Diligence Act on 1 June.
If you have any questions regarding the study, please contact the authors at post@stiftung-wirtschaftsethik.de.