Will the Supply Chain Law apply to other EU countries?

Published: Sep 17, 2021 by Mark Campbell

Will the Supply Chain Law apply to other EU countries?

Not exactly, but expect even more stringent EU legislation in 2022.

The EU Commission in February 2020 already initiated a study investigating due diligence requirements throughout the supply chain of EU companies. One of the most startling findings, was that only a third of all EU companies actively investigate their supply chains as to good practice relating to employee human rights and environmental protection throughout the supply chain.

Up until the passing of the German Supply Chain Law in June 2021, no official EU Commission regulation has yet been published. This is probably due to conflicting positions with the EU commission hierarchy between the camps that are pro-regulation and those that are pro-free market. On the pro-regulation side, akin to the German Supply Chain Law supporters, there is a strong movement for companies to undertake sufficient due diligence to check their supply chains as to ethical practices. On the free market side, opponents stress the need for any due diligence process not to unduly disrupt the day to day business of successful companies.

Any future EU legislation will of course need to be implemented on a national level, including being introduced into German national law and amending the German Supply Chain Law where necessary. If the future EU law is more stringent than the German Supply Chain Law, then the German government will be required to update he German Supply Chain Law so that it is compliant with the EU standard.

For instance, it will be interesting to see if the scope of applicability of the EU law will apply to small companies and accordingly go beyond the minimum scope of the German Supply Chain Law which is currently limited to companies with over 1,000 employees (from 2024) only.

There is no official timetable for the passing of the EU supply chain law, but commentators believe a bill will be introduced before the end of 2021 with an act being passed by the EU Parliament in 2022 - within one year of the coming into force of the German Supply Chain Law…