The Delegation of German Industry and Commerce (AHK) in Sri Lanka, and the Friedrich Naumann Foundation for Freedom (FNF) co-organised a capacity building program for officials of the Sri Lanka Export Development Board (EDB) in preparation for the forthcoming “German Act on Corporate Due Diligence in Supply Chains” which will come into force in Germany from January 1, 2023.
The objective was to train EDB officials to function as multipliers to share the information on sustainable supply chains with Sri Lankan SMEs, aiming at exporting to the German market.
Over 25 EDB officials who successfully completed the capacity building program on the new German Act were presented certificates.
The German Act on Corporate Due Diligence Obligations in Supply Chains is an effort on the part of the German Federal Government to protect human rights and manage material environmental risks through supply chains of companies operating in Germany. The act obliges all companies operating in Germany in 2023 with 3,000 or more employees, to implement a supplier risk management system.
In 2024, the act will apply to companies operating with 1,000 or more employees. The risk management system will help to assess, mitigate, and monitor human rights and environmental risks in the company’s supply chain.
The due diligence obligations will be applicable for Sri Lankan exporters from January 1, 2023 and exporters from Sri Lanka to Germany will need to comply with the requirements requested by the importers in Germany by way of sustainability-related certifications and standards to assure supply chain due diligence, through traceability, site level audits and company reporting mechanisms. Chief Delegate of AHK Sri Lanka, Ms. Marie Antonia von Schönburg said, “The implications of the German Supply Chain Due Diligence Act is to ensure Free and Fair Trade. This includes transparent value chains, sensible trade agreements that enable lasting good economic relations, the observance of fundamental human rights and international conventions in commerce, and the guarantee of economic standards across value chains when doing business with Germany.”
The European Union (EU) has a similar legislation that may come to fruition, that goes even further than the German Act. Considering that the EU is Sri Lanka’s second-largest export region and Germany is the fourth largest export destination for Sri Lankan exports, it is critical for Sri Lankan companies to be prepared to adhere with the conditions imposed by the German Supply Chain Due Diligence Act from January 1, 2023.
Head of the Friedrich Naumann Foundation Sri Lanka and Bangladesh, Wolfgang Heinze said, “The Supply Chain Due Diligence Act is an excellent opportunity for the export sector to strengthen and showcase their high standards. In the context of worldwide diversifications of supply chains, the current effort by Sri Lankan exporters would strengthen the national economy through higher exports to Germany, Europe and beyond.”
Chairman and Chief Executive of EDB Suresh de Mel said the EDB would create awareness on this law and provide necessary guidance for the exporters on compliance requirements with the new Act on Corporate Due Diligence in Supply Chains in Germany. This is now required by consumers in the EU and other high value markets around the world.