Lawyer Supply Chain Act Munich

Is Your Company Affected by the Supply Chain Act?

Supply Chain Act in Brief

General Information on the Supply Chain Act

Many business owners in Germany are postponing a topic that is quite significant for them. Already in 2023, the Supply Chain Act becomes mandatory for large companies in Germany (more than 3,000 employees), and in 2024 it will expand to cover companies with over 1,000 employees – affecting about 3,000 companies. This does not mean that smaller companies are unaffected. The German industry has long been characterized by close but highly effective collaboration among partners. Particularly in Germany’s showcase industries – mechanical engineering and automotive – almost exclusively just-in-time plug-and-play systems are used. Countless suppliers deliver precisely ordered modules at precisely the scheduled time. Companies that cannot comply are quickly out of the market. The large companies will be required by the law to oversee the upstream stages of the value chain as far as possible, and they will almost certainly be the first targets for fines and liability claims. Companies lacking the necessary compliance and quality management systems will be excluded from lucrative supplier markets.

What Does the Supply Chain Act Regulate?

The Supply Chain Act stems from the United Nations’ call for national action plans and legislation to enforce moral, ethical, societal, and especially environmental standards. Companies can no longer avoid responsibility by outsourcing problematic production or supply processes to external partners. They must also take responsibility if upstream production steps result in environmental violations or labor law breaches elsewhere. The list of protected areas under the Supply Chain Act is long and not yet fully defined. Many “soft” factors, like fairness and discrimination, are contrasted with few “hard” factors that can be precisely described and quantified, e.g., wage dumping, forced labor, or hazardous waste disposal. It is therefore difficult to predict how future legal cases under the Supply Chain Act will play out. Taking precautions is therefore a primary duty for business owners. Penalties remain uncertain – will they be financial, tied to revenue, or mostly reputational? Companies are encouraged to improve their compliance proactively.

Responsibilities Regarding the Supply Chain Act

Although the requirements of the new Supply Chain Act primarily affect well-established quality management systems and personnel, legal aspects will also be prominent in the first years. While the Act may initially seem to be “just” an additional risk from an organizational standpoint, many legal questions remain unresolved. It is unclear how aggressively the rules will be enforced and where responsibilities begin and end. Proportionality must always be maintained: a multinational corporation can inspect suppliers in East Asia personally, whereas a small Bavarian manufacturer cannot. Excuses will no longer suffice; companies must document what they are responsible for and where their responsibility ends.

To prepare for upcoming challenges, companies must first evaluate and critically assess their current situation. Without visible efforts to establish a functioning compliance management system, it will be difficult to remain competitive, especially if relying on large clients. These requirements can already be addressed today, both organizationally and legally. A competent lawyer for compliance, corporate law, commercial law, and labour law is the right contact.

Regional and National Advice on the Supply Chain Act

Are you looking for an experienced lawyer on the Supply Chain Act? Do you want legal certainty regarding your compliance obligations and corporate responsibilities? We are happy to assist you.

Legal advice on the Supply Chain Act is available regionally and nationally, e.g., in Augsburg, Nuremberg, Würzburg, Schweinfurt, Ulm, Kempten, Landsberg, Memmingen, Landshut, Weiden, Lindau, Garmisch, Regensburg, Ingolstadt, Starnberg, Bamberg, Amberg, Leipzig, Dresden, Stuttgart, Hamburg, Frankfurt, Berlin, Hanover, Bremen, Cologne, Düsseldorf, Freiburg, Kiel, Lübeck...