Germany's Merz Government Proposes Scrapping Supply Chain Act Reporting
The German government is set to remove reporting requirements under the Supply Chain Act, a move that has sparked debate. The act, in force since 2023, mandates companies with over 1000 employees to uphold due diligence regarding environmental and human rights in their supply chains. The Merz government aims to scrap these reporting obligations to boost economic growth.
The proposed change comes despite numerous importers continuing to document and publish their supply chain data on platforms, demonstrating a commitment to maintaining environmental and human rights standards. The act's origins date back to 2019 when Hamburg-based Tchibo published a paper advocating for binding rules, and 42 German companies called for a supply chain law, with both major parties, the SPD and CDU, supporting the initiative.
Key companies like BASF, BMW Group, and Siemens have been urged to back supply chain legislation. However, without mandatory reporting, it remains unclear whether companies are adhering to their due diligence obligations. The cabinet plans to decide on the draft bill for the EU Corporate Sustainability Reporting Directive (CSRD) on 3 September 2025.
Critics, such as Ramona Pop, President of the Federation of German Consumer Organizations, argue that the federal government's approach is premature, as it addresses the EU Due Diligence Directive before ensuring effective domestic enforcement. The debate highlights the balance between economic growth and responsible business practices in Germany.
