Planned weakening of German Supply Chain Act may contravene EU Law
The planned weakening of the German Supply Chain Act (LkSG) by the federal government could violate EU law. This conclusion is derived from a legal opinion commissioned by Oxfam and Germanwatch, authored by Professor Anne-Christin Mittwoch, and published on 10 July.
Background and Current Developments
On July 5, the day the European Supply Chain Directive (CSDDD) was published in the Official Journal of the European Union, coalition leaders agreed, as part of their Growth Initiative, to significantly weaken the scope of the LkSG. Thereafter, the LkSG will no longer apply to two-thirds of the companies currently covered by it.
However, the exemption for companies would only be temporary, as according to Article 37 of the CSDDD, the threshold of 1000 employees will apply five years after the CSDDD comes into force.
Legal Opinion: Violation of the Non-Regression Principle
According to the report, this planned weakening violates the non-regression principle anchored in Article 1 Paragraph 2 of the CSDDD. It explicitly states: "This Directive should not be used as a justification for reducing the level of protection of human rights, employment and social rights, or environmental or climate protection provided for in the national law of Member States or in collective agreements in force at the time of the adoption of this Directive."
The report asserts that the CSDDD cannot serve as a basis for lowering the protection levels of human, employment, and social rights, as well as environmental and climate protection, which existed in the national laws of the Member States at the time the CSDDD came into force. This holds true even if it leads to a harmonization between the LkSG and CSDDD.
Should the federal government proceed with its plan, this would, according to the legal scholar, be precisely the case. Article 1 Paragraph 2 of the CSDDD sets out two conditions that indicate a violation:
There must be a reduction in the protection level of human rights, employment, and social rights, or environmental or climate protection in national law.
The CSDDD must be the justification for this reduction.
The legal scholar considers both conditions met in the case of the planned weakening of the LkSG. Regarding the first condition, she believes that narrowing the scope also leads to a reduction, as the more companies are covered by the directive, the better the protection for potential victims of human rights violations. She bases this statement on the wording of recital 31, which states that "provisions concerning the scope" influence the directive's protection level. Regarding the second condition, she points to the close temporal connection of the legislative activities of the federal government in connection with the adoption of the CSDDD.
If the government sticks to its plan, it risks potentially facing an EU infringement procedure.
