BERLIN (Reuters) -The German cabinet passed changes on Wednesday to the national supply chain act to exempt larger companies from certain documentation requirements that have been criticised as costly and bureaucratic.
The law, which took effect in January 2023, makes German firms with more than 1,000 staff take due diligence procedures to monitor suppliers’ human rights and environmental protection standards.
Reuters reported that this regulation often ends up falling to smaller suppliers and duplicates a similar EU-wide directive, which must be transposed into national law by July 2027.
The coalition government had initially pledged to scrap Germany’s supply chain law completely.
The law will nevertheless continue until the EU Supply Chain Act is implemented, Labour Minister Baerbel Bas said on Wednesday.
Until then, violations of the existing obligations are to be penalized only in serious cases, such as severe human rights violations.
The Labour Ministry expects the law to reduce costs for businesses by 4.1 million euros ($4.80 million) per year.
($1 = 0.8542 euros)
(Reporting by Christian Kraemer and Maria Martinez, editing by Rachel More)
