The German Supply Chain Due Diligence Act: The Ultimate Guide on Now to Comply

Jurisdictions around the world are passing a series of new regulations focused on promoting human and labor rights, environmental issues, and other sustainable issues, resulting in the creation of a new set of obligations for businesses today. Examples of these regulations include the Dutch Due Diligence Act, the EU Corporate Sustainability Due Diligence Directive, the German Supply Chain Due Diligence Act, the Norwegian Transparency Act, and the Swiss Human Rights Due Diligence Law.

 The US, the UK, and Australia have joined hands with their counterparts in the EU with the main incentive of increasing their focus on and improving human rights within the corporate world. The main way of successfully achieving this is through the development of long-term and proactive strategic plans for compliance that can effectively assist companies in eliminating or at least significantly reducing human rights and environmental violations from supply chains. Financial penalties over violations can be a major accelerator towards this change, incentivizing adherence to these sustainable policies for many businesses!

Key Requirements of the German Supply Chain Due Diligence Act

Let's have a quick look at the key requirements of this act.

The Supply Chain Due Diligence Act bounds all German companies that supply their goods and services either directly or indirectly to meet certain obligations that are mainly related to human rights and environmental concerns.

The SCDDA requires companies to fully implement these obligations not only in their business operations but also in their global supply chain. Violations in these cases may result in companies facing legal charges. As a result, many businesses have started displaying concern over these issues, incorporating policies and laws within their business models that can help them facilitate sustainable business practices. There are many ways in which these ideas are being systematically and effectively executed. Let me share some of these:

Risk management systems and responsibilities

Firstly, it is important that companies determine and assess the risks associated with violating human rights in their supply chains. Once this process is completed, strategies regarding risk management should be made and implemented. The SCDDA highlight the following ESG or Environmental, Social, and Governance criteria which provide examples for these risk areas:

1.    Environmental damages are the first: ones on the list we have environmental damages. These may be related to using of pollutants, toxic substances, hazardous waste management systems, excess carbon emissions, etc.

2.    Illegal activities: these can include various things such as the illegal seizure of land and waters, indulgence in child labor, any form of forced labor, discrimination among employees based on grounds of religion, gender, ethnicity, etc., minimum wage policy violation, records of torture, breach of occupational health and safety, unsafe working conditions, etc. 

So, in short, businesses have to be careful not to indulge in any form of environmentally or socially determinantal tasks and adherence to the law is absolutely essential as well, something that cannot really be negotiated!

Preventative measures and remediation plans

Along with working on effective risk management systems, it is also important that businesses plan out preventative measures and remediation plans. Therefore, once the risk analysis related to human rights and environmental issues is carried out, the next step is for companies to start working on prevention and reduction tactics. Remedies and alternatives must be established for harmful activities once the business clearly knows the negative impact those activities will leave behind. Does that sound like a lot to digest? Well, let me simplify this further and break it down to help you understand this better.


Let's just say you area a business that tries to incorporate sustainability practices in your business models. You treat all your employees according to the legal standards set, give fair wages and make sure to stay away from environmentally detrimental practices, but you are still not partnering up and sourcing products from sustainable suppliers like yourself but those who are involved in environmental and social violations. So, are you a truly sustainable business? The answer is, no because in its true essence you are not fully following preventative measures and are not seeking out proper remedies and alternatives which in this case would be creating links with ethical and environmentally responsible suppliers. 

This was just one example of preventative measures and remediation plans that businesses can adopt. Below is a list of other things that can be adopted as well:

  1. Creating well-regulated codes of conduct in your     business to systematically discourage human rights and environmental     violations
  2. Documenting proper policy statements on human rights     strategies and making sure all concerned departments and employees within     your business are aware of them
  3. Providing relevant training courses to employees and     managers at senior positions as well to reinforce the significance of     these values from time to time
  4. Not taking violations lightly and coming up with actions     if any regulations are breached

Grievance process

In addition to this, companies need to implement effective grievance mechanisms. This will enable any affected individual within their company to report instances of violation and misconduct concerning both human rights and environmental policies.

Due Diligence obligations 

Mandatory Documentation and Reporting are other important things that companies are required to adhere to as per SCDDA rules and regulations. To do this, companies file annual reports which show both the actual and potential adverse impacts incurred on human rights and the environment as a result of their business operations and supply chain. The report also provides detailed documentation for corporate measures being adopted to achieve due diligence. These reports are submitted to the German Federal Office for Economic Affairs and Export Control.

Conclusively, it would be useful to point out that the SCDDA if administered on a large scale and with strict management can be very useful in bringing about a sustainable revolution in the corporate world, granting both environmental security and social security because of concern over Human Rights issues.

A significant part of being sustainable for any business is of course having sustainable logistics which prove to be beneficial in helping businesses reduce their carbon emissions and overall carbon footprint. At GRYN, we are striving hard to help businesses switch to sustainable logistics. Through our intelligence platform, we have successfully built a sustainable logistics network that allows for the sharing, calculation, benchmarking, and optimization of carbon emissions. Through GRYN, businesses can share their carbon emissions with thousands of customers in no time and play their role in contributing to environmental sustainability and systematically controlling their carbon footprint.
So, choose GRYN for your business and benefit from a well-regulated sustainable logistics and supply chain management system!