Government has revised supply chain regulations - Oxfam voices concern over significant weakening - Government modifications to supply chain legislation lead to significant dismantling, according to Oxfam
The European Union (EU) Supply Chain Directive, passed last year, is set to replace the German Supply Chain Act and come into effect on July 26, 2028. This directive aims to hold companies with more than 1000 employees accountable for human rights violations and environmental pollution in their production.
Initially, the revised EU supply chain regulations, including the EU Deforestation Regulation, were scheduled to take effect on December 30, 2025. However, due to pressure from businesses, a one-year delay has been granted, pushing the implementation to July 26, 2027. Affected companies will begin compliance in 2028.
Annual reporting obligations for companies under these laws remain, with annual due diligence statements and compliance confirmations legally required, especially under the EU Deforestation Regulation where a binding due diligence declaration must be submitted for products. However, the Commission has suggested that proof of compliance with the standards would no longer be required annually, but every five years.
The Commission also proposes that affected companies only ensure compliance with human rights and environmental standards with their direct suppliers, not the entire supply chain. The specifics of how the reporting obligation will change, as proposed by the Commission, have not been detailed.
The Commission's proposals do not specify the entity responsible for enforcing these changes in the supply chain compliance. The German Federal Government, through Federal Minister of Labour, Barbara Bas (SPD), has emphasised that the German Supply Chain Act would continue to apply until it is replaced by the EU law.
The process of changing the German Supply Chain Act has been criticized by Oxfam. They argue that real democratic participation is not possible with a single-day deadline for statements, as set by the government. This criticism has been echoed in the context of the EU Supply Chain Directive, as it is unclear how these proposed changes will impact the directive, as it is set to replace the German Supply Chain Act.
The Commission wants to limit the planned EU-wide civil liability for violations of the requirements. It is yet to be seen how this will affect the enforcement and accountability of companies under the EU Supply Chain Directive.
The changes proposed by the Commission have not been formally adopted yet. As the EU Supply Chain Directive approaches its initial implementation, businesses and advocacy groups will continue to monitor its development and implications.
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