Especially through the Supply Chain Act, sustainability has now gained significant importance in purchasing. Against the background of global warming, increasing environmental changes, as well as human rights violations in the value chains, the German Supply Chain Act on corporate due diligence was passed in June 2021.


How did the Supply Chain Act come about?

In 2011, the UN Human Rights Council adopted the UN Guiding Principles on Business and Human Rights. These principles formalize the responsibility of companies to achieve the 17 Sustainable Development Goals (SDGs). These goals are to be achieved by all UN member states by 2030.

In order to implement the UN Guiding Principles, the German government decided on the National Action Plan on Business and Human Rights (NAP) in 2016.

The task of sustainable supplier management is therefore to consume only the amount of resources that is absolutely necessary, without affecting future generations. The implementation of the NAP was based on the voluntary commitment of companies. However, a monitoring of the implementation status in 2020 revealed that less than 20% of companies met the NAP requirements.


What does the Supply Chain Act stipulate?

Starting in 2023, companies with at least 3,000 employees will initially be obliged to take action, and from 2024, companies with at least 1,000 employees will be required to comply. The aim is to hold companies that source goods or services abroad responsible for the production processes and working conditions of their suppliers. Companies must now identify risks of human rights violations and environmental destruction at direct suppliers and, on a case-by-case basis, also at indirect suppliers. In addition, companies must take countermeasures and document them to the Federal Office of Economics and Export Control (BAFA). In case of violations, fines or damages may be imposed.

The law represents a paradigm shift for the protection of human rights and the environment, because:

  • it changes voluntary Corporate Social Responsibility (CSR) into binding human rights and environmental requirements
  • companies are generally required to capture their entire supply chain
  • a regulatory framework for enforcing due diligence and sanctions is being established

In addition to the German Supply Chain Act, the EU Commission is also planning a European Supply Chain Act. This EU law should combine the best of the due diligence laws of the member states, such as the capture of the entire value chain from the Netherlands, strong regulatory enforcement from Germany, and civil liability from France. The specific requirements are still being finalized. A publication is expected in 2023.


How can my supplier management meet the requirements of the German Supply Chain Act?

For companies that want to remain successful in the long term, it is essential to design their supply management in compliance with these ecological, economic, and social aspects. This includes ensuring sustainability along the supply chain. There are tools available to involve one’s own suppliers to obtain a complete overview of the supply chain and assess risks in the case of indirect suppliers. In addition, recorded and prioritized risks must be documented, preventive and corrective measures taken, and their effectiveness recorded in order to be included in the BAFA questionnaire.



The Supply Chain Act requires companies to ensure sustainability at all levels of their supply chain. It is possible to create internal processes to meet this requirement.