In a public statement, the German Sporting Goods Industry Association (BSI) criticizes the German government’s draft law on due diligence (we reported earlier), which has just cleared the first legislative hurdles. The bill aims to force companies to comply with human rights in their supply chain. It targets the textile, electronics, chemical, pharmaceutical, food and automotive industries and is intended to impose heavy fines starting at €100,000 for non-compliance. However, in the BSI’s view, the bill significantly distorts the competitive situation for companies based in Germany and contains unclear regulations that should be improved before the law passes the Bundestag, which is expected to happen in a few months. In its statement, the BSI primarily calls for a European solution to ensure a level playing field for all market participants, as German companies compete with European and non-European competitors that would not be affected by the law. However, figures show that the proposed law will only affect a handful of companies in Germany, as all regulations only apply to companies with more than 1,000 employees.

From the BSI’s point of view, the current bill should be revised so that it can serve as a template for a pan-European solution. To this end, the BSI demands, among other things, that the act focus exclusively on the relationship with direct contractual partners who are at the center of the supply chain. BSI also questions the need for annual risk analysis and proposes a mandatory analysis every two years.

As the European Parliament is apparently preparing a draft law with even more far-reaching regulations, it is questionable to what extent the BSI’s demands will be relevant for German companies.