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German cabinet approves exemptions from the Supply Chain Act

On Wednesday, the German cabinet approved changes to the National Supply Chain Act to exempt large companies from certain document requirements which have been criticized as being costly and bureaucratic.

German companies with over 1,000 employees are required to follow due diligence procedures in order to monitor the human rights and environmental standards of their suppliers.

Reports indicate that smaller suppliers are often affected by this regulation, and it duplicates an EU-wide directive which must be translated into national law before July 2027.

Initially, the coalition government pledged to completely scrap Germany's Supply Chain Law.

Baerbel Bas, Minister of Labour, said that the law will continue to be in force until the EU Supply Chain Act comes into effect.

In the meantime, only serious violations of existing obligations, such as grave violations of human rights, will be punished.

The Labour Ministry anticipates that the law will reduce business costs by 4,80 million euros per year.

(source: Reuters)