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Labor Minister Heil: Use “leeway to reduce administrative burdens”.

Photo: Political Moments / IMAGO

The FDP-led federal ministries of finance and justice want to ensure that Germany abstains from the final vote on the EU supply chain law. Now Labor Minister Hubertus Heil (SPD) wants to get Germany to agree to the project after all. According to SPIEGEL information, he has presented proposals for reducing bureaucracy in companies, which the cabinet will deal with on February 7th.

According to SPIEGEL information from the Ministry of Labor, the aim is to use the “leeway to reduce administrative burdens” provided for in the EU directive.

The reporting obligations that exist under the already applicable German Supply Chain Act (LkSG) are to be suspended. "In concrete terms, this means that the affected German companies will not have to prepare a report for the 2023 financial year based on the LkSG in 2024," says Heil's key points paper. The aim is “that companies only have to report in accordance with EU requirements”. From 2025 onwards, “companies will produce reports in accordance with European standards”.

Easier risk analysis should come immediately

Federal Finance Minister Christian Lindner and Federal Justice Minister Marco Buschmann had previously announced in a letter that they could not support the result of the consultations between the EU Commission, Parliament and member states on the EU Supply Chain Act. “In the Council of the European Union, this results in Germany abstaining, which ultimately has the effect of a ‘no’ vote,” the letter says. This means that the EU project as a whole is now in jeopardy because other countries could follow Germany.

Lindner and Buschmann argued that the EU law would affect more companies than currently. They also fear that companies would face significant civil liability for breaches of duty in the supply chain.

In addition to suspending the reporting obligations, Labor Minister Heil is now proposing that the exculpatory provisions of the EU law should be applied directly - before the rest of the EU directive has to be implemented. For example, risk analysis is intended to be made easier with the EU directive: Companies are allowed to control states with a high level of “law enforcement” more loosely - this means that raw materials and intermediate products from other EU countries probably do not have to be examined. The control effort is therefore likely to be lower than under current German law.

Heil's key points also stipulate that the EU directive must not be over-fulfilled, i.e. that companies in this country must not be treated more strictly than the EU stipulates.

In addition, the EU directive should not apply to small and medium-sized companies that, according to the EU definition, have a maximum of 250 employees and a turnover of up to 50 million euros. However, Heil wants to have the “potential indirect effects” of the directive on small and medium-sized companies examined.

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