National Supply Chain Law Upcoming

Sustainability Remains a Political Focus

To start off our newsletter series "ESG and Law“, we will be reporting on new laws in the areas of environment, social & governance (ESG), sustainability or corporate social responsibility (CSR) that have already been passed or are currently in the political debate. Particularly noteworthy here are the increasingly concrete considerations for a national or Europe-wide law on human rights due diligence obligations in the supply chain: On 14 July 2020, the Federal Ministers Dr Gerd Müller and Hubertus Heil informed in a press conference about the "again disappointing" results of the second round of monitoring of the National Action Plan on Business and Human Rights (NAP). Considerably less than 50 percent of the companies were in fact complying with their corporate duty of care. Now the coalition agreement for a supply chain law is taking effect, with the aim of achieving a conclusion before the end of this legislative period.

The corona crisis has not stopped the discussion about sustainability, on the contrary, it has perhaps even promoted it further (see our Newsletter "Corona vs. CSR: Does the Virus also Stop Sustainability?" of early April 2020). The new decade will therefore continue to be in the spotlight of sustainability (see fundamentally our Newsletter "Outlook Corporate Social Responsibility 2020: More Sustainability, More Acts, More Risk" of early February 2020).

In our Newsletter "ESG and Law: Sustainability Remains a Political Focus" we now report on the following current topics:

  • First we will present the main sustainability-related aspects of the Trio Programme (No. 1 of the newsletter) as well as the national programme for the current EU Council Presidency based on it (No. 2 of the newsletter). Accordingly, sustainability is and will remain a very important factor on the political stage, even in times of pandemics; we then go into detail about the rapid developments in the area of human rights due diligence, key word Supply Chain Act (No. 3 of the newsletter).
  • Not only have the key features of a national Supply Chain Act of March 2020 become public knowledge in the meantime. In view of the results of the second round of monitoring of the NAP, Federal Ministers Müller and Heil have announced a national supply chain law for this legislative period. The plans for an EU supply chain law are also rapidly gaining momentum;
  • In view of the high financing requirements for the transition to sustainable management, the topic Sustainable Finance also remains a high priority on the agenda (No. 4 of the newsletter); in addition to the EU Commission's Renewed Sustainable Finance Strategy, the revision (expansion) of non-financial reporting is under discussion.
  • Of particular relevance in this area is the EU Taxonomy which has most recently been finally adopted, the world's first classification system for ecologically sustainable economic activities (No. 5).
  • Finally, a recent World Economic Forum (WEF) white paper on Stakeholder Capitalism provides an outlook on how the EU Commission's plans in the field of Sustainable Corporate Governance announced in the European Green Deal could take shape (No. 6).

Enterprises should thus prepare for increased ‑ also regulatory ‑ measures to promote a sustainable economy and the announced transition to a "Green Economy". At present, this is particularly true with regard to the national law on due diligence in the supply chain which has now been explicitly announced.

Dr Daniel Walden

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