A penchant for scaremongering about the EU supply chain law
The agreement on the EU supply chain law is driving business organisations to the barricades. Their angry reactions suggest that the economic downfall of the West is imminent. This is, of course, an exaggeration and cannot be in the interests of those involved. It is advisable to pause and objectively sort out what is a justified concern and what is scaremongering.
The fact is that the European regulations go beyond the German Supply Chain Act. The German government will, therefore, have to tighten it up in time. This applies to the target group: the threshold of 1,000 employees, which will apply from January, will be lowered further to 500. And it also applies to the substance: companies will have to be prepared for civil liability, for instance.
The impositions need to be reasonably proportional to their purpose
For tens of thousands of European companies, the due diligence obligations are an imposition. That point of view is correct. They have a specific purpose: to put a stop to the destruction of the environment and human life. Business representatives demonstratively uphold these values. Such assurances cannot be filled with life for free. It is, therefore, important that the impositions are reasonably proportional to their purpose.
Three aspects are central to this. Firstly: SMEs – above all companies with fewer than 500 employees, which are NOT covered by the EU Supply Chain Act. If it turns out that larger companies are imposing due diligence obligations on their smaller suppliers, the legislator has failed. EU Industry Commissioner Thierry Breton has offered SMEs technical and financial help with implementation. This must not remain lip service.
Some sweeping criticism overshoots the mark
Secondly, there is the alleged threat of an exodus from sensitive regions of the world. If companies were to withdraw in droves, the Supply Chain Act would come to nothing. The collateral damage would outweigh the benefits. Thirdly: Double reporting obligations. Assurances that due diligence obligations are in line with existing sustainability reporting regulations must not turn out to be an empty promise.
It is legitimate to point out these concerns. However, some sweeping criticism overshoots the mark. The view of the industry association BDI that the compromise "threatens" Europe's economy may still be in the grey area. Thilo Brodtmann from the mechanical engineering association VDMA, on the other hand, speaks of the "next nail in the coffin for the international competitiveness of European industry" That is, with all due respect, lobby populism.
