The reason for these abuses is also a fundamental legal contradiction of globalisation: victims of human rights violations have so far had little chance of holding parent companies responsible in court at their headquarters if their subsidiaries and suppliers abroad trample on human rights. However, the same parent companies can sue foreign states on the basis of trade and investment agreements if they restrict the profit expectations of their subsidiaries through regulations. This also applies to regulations in the areas of water supply, environmental and health protection or land distribution, which serve to implement social human rights.
But progress is being made: In June 2021, under pressure from the Supply Chain Act initiative, the German Bundestag passed the Supply Chain Duty of Care Act, which obliges large German companies to respect human rights and certain environmental standards. Violations could result in fines or even exclusion from public contracts. However, the business lobby managed to water down the law considerably. For example, there is no civil liability rule that would improve the chances of success for those affected in the event of claims for damages before German civil courts.
However, this will change with the EU Supply Chain Act, which was adopted by the EU Council of Ministers on 24 May 2024 and must be implemented in all EU member states from 2027. This will give those affected a real opportunity to sue for damages before civil courts in the EU if companies have breached their due diligence obligations and caused damage as a result. Affected parties and civil society organisations must also be better involved in risk analyses, prevention and remedial measures than under German law. Additional environmental agreements, such as those on biodiversity and marine protection, must be respected. And companies must at least develop climate plans in line with the goals of the Paris Climate Agreement. One catch: it is estimated that only 5,500 companies across Europe with more than 1,000 employees and a minimum turnover of 450 million euros will be covered.
Together with partners, we are now supporting those affected in using the German and soon the European Supply Chain Act to prevent or end human rights violations and environmental damage or to enable reparations. Together with the Treaty Alliance Germany and international partners, we are also campaigning for a new UN human rights treaty on business and human rights that enshrines the primacy of human rights over corporate profit expectations in international law and obliges all states to adopt effective supply chain laws.
