German Due Diligence Law

The German Corporate Due Diligence Law (GDDL) and its impact on sourcing and manufacturing in APAC.

On 01. January 2023 the new German Due Diligence Law will take effect and so Germany is aiming to hold companies accountable for their supply chains regarding human rights and environment protection. 

TOP Beraten gratefully thanks the Konrad-Adenauer Foundation (KAS) and the Singaporean-German Chamber of Industry and Commerce (SGC) for hosting this very interesting event/webinar on the matter of this topic. The event took place on the 10th of May, at the Shangri-La Hotel in Singapore and had participants joining in person as well as interested listeners from Germany and many countries in the APAC region. 

Now coming to the topic and the first speaker Martin Knapp, Divisional Head, International sustainability initiatives, DIHK. He gave a very insightful overview of the new German Law, explaining the philosophy behind it, the effects and what is at stake as well as, who will directly, and indirectly be affected and what organizations and their suppliers should do.   

The so-called German Supply Chain Law is making large German companies responsible for checking on their suppliers and ensuring that the companies they are dealing with are doing the right thing on the matter of human rights, compliance with social standards and environmental protection.

The philosophy behind is that this new law will have a great effect by reaching not just the suppliers of large German companies, but also their indirect 2nd tier, 3rd tier suppliers until the end of the supply chain as the obligations should be passed on respectively. 

To who do the new obligations of the GDDL apply? 

  • Directly affected from 01. Jan 2023 🡪 German companies or Comp. groups with more than 3000 employees
  • Directly affected from 01. Jan 2024 🡪 German companies or Comp. groups with more than 1000 employees 
  • Branches of foreign companies in Germany of these sizes have to comply respectively  

The next speaker Margit Kunz, Deputy General Manager & Head of Central Tasks Department at SGC, presented a study conducted by SGC and KAS in which 364 companies of the chamber Network in APAC participated. 

The objectives of the study were to understand current due diligence practices in APAC, to identify challenges for companies complying with the new law as well as to assess the impact of the new German standard of care for human rights and the environment.

One of the key findings presented in the study “Sustainable manufacturing and sourcing in APAC –
Meeting the new German standard of care for human rights and the environment”
by the author
Robin Hoenig, Divisional Head, Trade Policy Competence Centre (Asia/ASEAN), SGC stated that: 

“Although the GDDL only applies to MNCs with more than 1000 or 3000 employees, the study finds that almost all SMEs anticipate that they will be indirectly impacted by the regulation. Subsequently, many are working on a compliance strategy.” 

 – Robin Hoenig

This shows that the Act actually is expected to affect many companies indirectly as intended by the German lawmakers. So, it is advisable to learn more about the obligations that will be relevant soon and get one’s compliance policies in line. 

At the same time, the study also uncovers challenges that companies face connected to compliance with its regulations. One of the main ones is that many companies find the GDDL ambiguous and express the need for sector-specific guidelines.

In the following part of the event Christopher Haas, Executive Director, Haas & Co. Magnettechnik GmbH and Gerhard Mair, Sustainability Expert, ams OSRAM presented how their companies already handle the compliance with human rights and environmental protection and what measures they take in order to comply with the new Act. 

In the end, after a short Q&A session, Tim Philippi, Executive Director, SGC gave his closing remarks on the successful event. Original German legal text: Gesetz über die unternehmerischen Sorgfaltspflichten in Lieferketten.

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