Germany Eyes Relief for Businesses by Pausing Supply Chain Regulations

The German government is considering a two-year suspension of the country’s supply chain due diligence law to alleviate the bureaucratic burden on companies until a European directive is implemented, Economy Minister Robert Habeck announced on Friday.

Germany’s supply chain act, effective since January 2023, mandates that companies with over 1,000 employees establish due diligence procedures to monitor human rights and environmental standards among their suppliers. However, many German companies have struggled with the costs and administrative load of the law, claiming it undermines their global competitiveness.

The European Corporate Sustainability Due Diligence Directive (CSDDD), which was approved by the EU parliament in April and is set to be introduced in 2026, will require Germany to revise its own supply chain legislation.

“We can pause it. That would be the best thing to do. I think that is absolutely feasible,” Habeck said at an event for family-run businesses, suggesting that suspending the national law could provide much-needed relief for companies. He added that a final decision is anticipated within two to three weeks.

Habeck’s proposal received mixed reactions from coalition partners. The Social Democrats’ parliamentary group opposed the idea, calling Habeck’s statement “very surprising.” SPD labor policy lawmaker Martin Rosemann criticized, “Does a top Green politician seriously want to sacrifice human rights to curry favor with family businesses?”

Conversely, FDP lawmaker Carl-Julius Cronenberg supported Habeck’s suggestion, noting that suspending the law would offer small and medium-sized businesses the breathing space needed during economically challenging times.

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