Conference „Sustainability in Corporate Law“
Sustainable regulation
2022-11-11 Self-commitment was not enough: from 1 January 2023, the Supply Chain Act will ensure respect for human rights in global trade. At the international conference in the Central Building, lawyers and human rights activists will discuss the consequences of the statutes from Thursday on.
Until now, human rights were enforced by the state. "Now legislation is forcing companies to act sustainably," explains Prof. Dr. Alexander Schall. The professor of German, European and International Private and Corporate Law, and Comparative Law, underlines the importance of jurisprudence for sustainability on the occasion of the conference "Sustainability in Corporate Law": "Legislation can implement the ideas of sustainability if people do not do it voluntarily", the lawyer explains.
The German business community would have liked to dispense with the Supply Chain Act: "Companies fear being forced out of markets. The law only applies to companies based in this country. One would not be helping human rights, but foreign competitors who would not have to observe these regulations," explains Alexander Schall. The Supply Chain Act is intended to improve human and children's rights along the global trade chain. German companies must check the working conditions of their suppliers and, if necessary, intervene to regulate them, for example by demanding improvements in working conditions. If German companies violate this obligation, they face severe penalties.
Humanitarian organisations argue the law is not sufficiently far-reaching: companies are not liable for damages and only the first link in the supply chain must be strictly monitored on an ongoing basis. Beyond that, German companies only have to take action when they become aware of grievances: "I assume that NGOs will report human rights violations. After that, the companies will also react. Nobody wants to violate human rights. Besides, no one can afford the damage to their image nowadays," says Alexander Schall.
Should the planned EU Corporate Sustainability Due Diligence Directive (CSDD) come into effect, the German Supply Chain Act will become obsolete anyway: "The directive is stricter and demands strict control of all suppliers. In addition, companies could be sued for damages in the event of accidents," explains Alexander Schall.