This paper deals with the burdens and benefits for companies of an upcoming Due Diligence Act on supply chains. The focus is put on the supply chain law in Germany and in Europe. In the first step, fundamental terms and theories concerning the supply chain law are presented referring to the German and European Due Diligence Act putting both in a relationship by illustrating similarities and differences between them. Subsequently, various kinds of burdens and benefits of the supply chain law are assessed from the viewpoint of companies in general. Finally, both up and downsides of impacts on companies are going to be considered in a direct comparison ending in a conclusion.
Volkswagen factory near internment camps for Uyghurs in Xingjiang, child labour on toxic cobalt and lithium mining plants, exploitative and polluting fast fashion industry. These are only few of the numerous conditions that companies cause in their environment through supply chains. According to the International Labour Organization, in 2020, almost 1 in 10 children worldwide is in child labour, accounting for 160 million children worldwide. Companies have grown their supply chains internationally while gaining high profits and also exploiting developing countries. At the same time, one of the largest and most effective levers to preserve the environment and to avoid human rights violations are supply chains. Therefore, making supply chains more sustainable is one key task companies are confronted with the upcoming mandatory human rights and environmental due diligence regulations.
Although there are several voluntary guidance approaches with the aim of minimizing and avoiding human rights violations and environmental harm such as the United Nations Principles for Business and Human Rights, also referred to as the "Ruggie Principles", current results are disappointing regarding the implementation of this concept. That is why more and more countries are enacting regulations in order to ensure more sustainable supply chains. Following other European countries, the German parliament recently has passed the “Supply Chain Due Diligence Act” or in short, the supply chain law. As highly suggested and expected, the European parliament has drafted a European solution as called European Due Diligence Act. These recent developments imply both, new challenges and opportunities for companies that again have caused a major divergence of views of various stakeholders.
Inhaltsverzeichnis (Table of Contents)
- 1 Introduction and objectives of the term paper
- 2 Theoretical background and interrelations
- 2.1 The term of sustainability and supply chains
- 2.2 German Supply Chain Act
- 2.3 European Supply Chain Act
- 2.4 Relationship between the German and the European Supply Chain Act
- 3 Assessment of burdens for companies
- 3.1 Economic burdens
- 3.2 Political and social burdens
- 4 Assessment of opportunities for companies
- 4.1 Economic opportunities
- 4.2 Social opportunities
- 4.3 Environmental opportunities
- 4.4 Impacts on Human Rights
- 5 Discussion and conclusion
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This term paper examines the burdens and benefits of supply chain laws for companies, focusing on the German and European Due Diligence Acts. It aims to analyze the impacts of these regulations from an economic, social, and environmental perspective. The paper first establishes a theoretical foundation by defining key terms like sustainability and supply chain management, then compares and contrasts the German and European legislation. Finally, it assesses the implications of these laws for businesses, considering both the challenges and opportunities presented.
- Sustainability in supply chains
- Comparative analysis of German and European Supply Chain Acts
- Economic burdens and opportunities for companies
- Social and environmental impacts of supply chain regulations
- Human rights considerations within supply chains
Zusammenfassung der Kapitel (Chapter Summaries)
1 Introduction and objectives of the term paper: This introductory chapter sets the stage by highlighting the problematic conditions within global supply chains, including child labor, environmental damage, and human rights violations. It emphasizes the crucial role of supply chains in environmental protection and human rights, noting the shortcomings of voluntary approaches like the Ruggie Principles. The chapter introduces the German and European Supply Chain Due Diligence Acts as responses to these issues, establishing the research question of analyzing the burdens and benefits of these acts for companies. The overall objective is to evaluate the impact of these regulations on businesses, examining both positive and negative implications.
2 Theoretical background and interrelations: This chapter provides a foundational understanding of sustainability and supply chain management (SCM). It defines sustainability using the Brundtland Report's definition and explores the "Triple Bottom Line" approach, encompassing environmental, economic, and social dimensions. The chapter contrasts the positive aspects of SCM, such as international expansion and competitiveness, with its negative impacts, like human rights abuses and environmental degradation. It highlights the socio-ecological effects of companies' actions and emphasizes the need for improved regulations to enhance legal certainty and harmonize existing approaches.
3 Assessment of burdens for companies: This chapter delves into the various burdens that companies face due to supply chain regulations. It explores economic burdens, such as increased compliance costs, potential financial penalties for non-compliance, and the need for enhanced monitoring and auditing systems. The chapter also discusses the political and social burdens, including potential reputational damage from negative publicity related to supply chain issues, increased stakeholder scrutiny, and navigating complex regulatory frameworks across different jurisdictions. The overall argument emphasizes the challenges and costs associated with fulfilling due diligence requirements.
4 Assessment of opportunities for companies: This chapter focuses on the positive aspects and opportunities that arise from implementing supply chain due diligence. It explores how improved sustainability practices can enhance a company's reputation and attract socially responsible investors and consumers. The chapter also examines the economic opportunities, including potential cost savings through waste reduction, efficiency improvements, and enhanced resource management. It further analyzes the positive social and environmental impacts of sustainable supply chains, while also noting the improved human rights conditions and reduced risks of negative publicity. The section argues that adapting to these regulations can offer long-term advantages.
Schlüsselwörter (Keywords)
Supply chain management, sustainability, human rights, environmental due diligence, German Supply Chain Act, European Due Diligence Act, corporate social responsibility, economic burdens, economic opportunities, social impacts, environmental impacts, legal compliance.
Frequently Asked Questions: A Comprehensive Preview of Supply Chain Laws
What is this document about?
This document provides a comprehensive preview of a term paper examining the burdens and benefits of supply chain laws for companies, specifically focusing on the German and European Due Diligence Acts. It offers a detailed table of contents, outlines the objectives and key themes, summarizes each chapter, and lists relevant keywords.
What are the main objectives of the term paper?
The term paper aims to analyze the impacts of the German and European Supply Chain Due Diligence Acts on companies from economic, social, and environmental perspectives. It seeks to compare and contrast the two acts, assess the challenges and opportunities they present for businesses, and evaluate their overall impact.
What key themes are explored in the paper?
Key themes include sustainability in supply chains, a comparative analysis of the German and European Supply Chain Acts, economic burdens and opportunities for companies, social and environmental impacts of supply chain regulations, and human rights considerations within supply chains.
What is covered in the introduction?
The introduction highlights problematic conditions in global supply chains (child labor, environmental damage, human rights violations), emphasizes the importance of supply chains in environmental protection and human rights, and points out the limitations of voluntary approaches. It introduces the German and European Supply Chain Due Diligence Acts as solutions and establishes the research question: analyzing the burdens and benefits of these acts for companies. The overall objective is to evaluate their positive and negative implications for businesses.
What theoretical background is provided?
The theoretical background chapter defines sustainability using the Brundtland Report and the "Triple Bottom Line" approach. It explores supply chain management (SCM), contrasting its positive aspects (international expansion, competitiveness) with negative impacts (human rights abuses, environmental degradation). It highlights socio-ecological effects of companies’ actions and emphasizes the need for improved regulations for legal certainty and harmonization.
How are the burdens on companies assessed?
The assessment of burdens focuses on economic burdens (increased compliance costs, potential penalties, enhanced monitoring needs) and political and social burdens (reputational damage, stakeholder scrutiny, navigating complex regulatory frameworks). It emphasizes the challenges and costs of fulfilling due diligence requirements.
How are the opportunities for companies assessed?
The assessment of opportunities highlights the positive aspects of implementing supply chain due diligence. It explores how improved sustainability practices enhance reputation, attract responsible investors and consumers, and offer economic opportunities (cost savings, efficiency improvements). It also analyzes positive social and environmental impacts, improved human rights, and reduced risks of negative publicity, arguing that adaptation offers long-term advantages.
What are the key takeaways from the chapter summaries?
The chapter summaries provide a concise overview of the paper's structure and content, highlighting the key arguments and findings of each section. They emphasize the complexities of supply chain regulations and their significant impact on businesses, considering both the challenges and opportunities presented.
What are the keywords associated with this term paper?
Key words include: Supply chain management, sustainability, human rights, environmental due diligence, German Supply Chain Act, European Due Diligence Act, corporate social responsibility, economic burdens, economic opportunities, social impacts, environmental impacts, legal compliance.
Where can I find more detailed information?
This document is a preview. For a complete analysis, please refer to the full term paper.
- Quote paper
- Anonym (Author), 2022, Burdens and Benefits of a Supply Chain Law for Companies. The "Lieferkettengesetz" and the "European Supply Chain Act", Munich, GRIN Verlag, https://www.grin.com/document/1337442
