The German Supply Chain Act is Here: How Should Companies React?

As of January 2023, the German Supply Chain Act aims at creating a more level playing field for German companies based on due diligence and in favour of human rights and environmental protection. In a joint position paper, the CSCP, the Wuppertal Institute, and Sustainabill elaborate on the limitations of the supply chain act and give recommendations about what should be included in a future European legislation in order to be more effective.

Controversies related to difficult working conditions and environmental pollution (especially in the early phases of the supply chains) and the difficulties to effectively monitor all links of the chain show that the aspirations of companies are often not met in reality. Following up on the prior publication “Sustainable Supply Chains: Global Cooperative Regional Economies for Prosperity and Resilience”, this position paper links the Supply Chain Act to the practice-oriented perspective of companies and explicates what it means to them.

The paper puts the ambition for more sustainable supply chains into the broader picture of sustainable development and builds on four starting points for companies:

• Orientation towards a model of globally cooperative regional economies (globalise competencies and cooperation, regionalise material flows)
• Mandatory alignment of supply chains with sustainability (acting with shared responsibility)
• Establish supply chain resilience through cooperation and digital management systems
• Establish sustainable public procurement as a role model

The position paper takes up the missing pieces of the current regulation and discusses ways for companies to proactively initiate win-win processes for all stakeholders along the value chain. It stresses the role of internal process adjustments in sourcing and procurement, reformulating the sustainability strategy, and chances of cooperation in industry sectors. The paper also highlights the importance of capacity building internally within companies but also within the entire supply chain network.

The position paper “The German Supply Chain Act is Here: How can it have an impact and how should companies react” is available in English and German.

For further questions, please contact Cristina Fedato.