Human rights compliance in Germany: Current steps towards a mandatory Human Rights Due Diligence Law

Germany is currently working on a mandatory human rights due diligence law (“HRDD Law”, in German: “Sorgfaltspflichtengesetz”, also often called “Lieferkettengesetz”/”Supply Chain Law”) that would oblige large German companies to take appropriate measures to prevent human rights violations in their business activities and supply chains. If companies fail to comply with the law, they may face civil liability for damages and risk sanctions.

The need for such a mandatory law has now become clear as the German government’s expectations as set out in its National Action Plan on Business and Human Rights (“NAP”) and confirmed in the 2018 coalition agreement have not been met, which means that the government’s initial approach of voluntary self-commitment has proven insufficient. The goal was that 50% of the German companies with more than 500 employees should voluntarily implement a human rights due diligence by establishing processes that identify, prevent and mitigate the adverse effects of their business activities until 2020. Two voluntary surveys amongst (randomly selected) companies with more than 500 employees have shown that only about 20% of the surveyed companies fulfilled the requirements of the NAP.

Although Chancellor Angela Merkel (Christian Democratic Union, CDU) has put plans for a HRDD Law on hold during Covid-19, the results of these surveys regarding the compliance of companies with human rights and social minimum standards as well as the immense pressure on the legislature resulting from the public debate suggest that a HRDD Law is very likely to be passed before the end of this legislative period in autumn 2021. The Minister for Labour and Social Affairs Hubertus Heil (Social Democratic Party, SPD) and the Minister for Economic Cooperation and Development Gerd Müller (Christian Social Union, CSU) send strong messages, most recently at a large digital conference on “Human Rights and Decent Work in Global Supply Chains”. The Ministers have prepared a position paper summarising the key elements of the law.