Corporate (Ir)Responsibility Made in Germany - Part III: The Referentenentwurf: A Compromise à la Merkel - By Mercedes Hering

Editor’s Note: Mercedes is a recent graduate of the LL.B. dual-degree programme English and German Law, which is taught jointly by University College London (UCL) and the University of Cologne. She will sit the German state exam in early 2022. In September 2020, she joined the Asser Institute as a research intern for the Doing Business Right project.


I. What happened so far

It took Ministers Heil (Labour, SPD), Müller (Development, CSU) and Altmaier (Economy, CDU) 18 months to agree on a draft for the Lieferkettengesetz (Supply Chain Law) to be presented soon to the German Bundestag for legislative debates. For an overview of the different proposals put forward by the Ministries and NGOs, and political discussion surrounding them, please check my previous blogs, which you can find here and here. You can also watch the panel discussion on the Lieferkettengesetz that we organized in November 2020 with Cornelia Heydenreich (Germanwatch), Miriam Saage-Maaß (European Centre for Constitutional and Human Rights), and Christopher Patz (European Coalition for Corporate Justice).

On 15 February 2021 the government’s “final” draft was published – the so-called “Referentenentwurf”. This initial agreement was met with relief from all parties involved, as it was preceded by a long-lasting deadlock. At first, Minister for Economic Affairs, Peter Altmaier, blocked Cabinet meetings so that the government position paper (“Eckpunkteplan”) published by Ministers Heil and Müller could not be discussed. Afterwards, Altmaier again blocked a compromise proposal brought forward by Müller and Heil in Cabinet. The matter went up to the “Koalitionsausschuss”, the committee that negotiates if members of the coalition parties cannot reach an agreement. This committee failed to come to an agreement. The issue of civil liability and the scope of application were the most controversial points. Thereafter, the matter reached the “Chefetage”, Angela Merkel. She sat down with the three ministers involved and Olaf Scholz, Vice-Chancellor and Minister for Finance (SPD), and tried to mediate between the different positions. The group met twice before, eventually, an agreement was reached resulting in the Referentenentwurf of 15 February 2021. The agreement did not last for long. Peter Altmaier withdrew (again) his support for the draft just after it had been circulated.

On 28 March 2021, another “final” draft was published. Those two drafts differ in subtle but impactful aspects. This blog post was originally based on the first draft; its text has been amended to integrate the changes introduced in the second draft. The second Referentenentwurf is the one signed off by Cabinet on 3 March 2021. In this blog, I will first summarize the main points of the draft(s), and afterwards review the various critical points raised against it.More...

Corporate (ir)responsability made in Germany – Event report - By Mercedes Hering

Editor's note: Mercedes is a recent graduate of the LL.B. dual-degree programme English and German Law, which is taught jointly by University College London (UCL) and the University of Cologne. She will sit the German state exam in early 2022. Alongside her studies, she is working as student research assistant at the Institute for International and Foreign Private Law in Cologne. Since September 2020, she joined the Asser Institute as a research intern for the Doing Business Right project

On 27 November 2020, the T.M.C Asser Institute hosted an online roundtable discussion on the German Supply Chain Law (Lieferkettengesetz). The full recording of the event can be seen here:

The three panelists, Cornelia Heydenreich from Germanwatch, Miriam Saage-Maaß from the ECCHR and Christopher Patz from the ECCJ reflected on the political framework surrounding the debate, current drafts, and Germany’s role in the European discussion on binding due diligence legislation.

I. The pathway to a Lieferkettengesetz 

As Heydenreich pointed out, civil society’s role in the struggle for a Lieferkettengesetz can barely be overstated. When in 2011, the UNGPs were passed, Germany was in no rush to implement binding due diligence legislation. Instead, the German legislators waited for their European counterparts to come forward with an action plan. It was in 2013 when a new – more left-leaning – government first voiced the idea that a national action plan should be drawn up. In 2015, consultations began. The consultation process was a dialogue, the drafting process itself was not. Even though the monitoring methodology fell short of civil society’s expectations, the result of the monitoring process was shocking nonetheless: Only 13-17% of companies complied with the National Action Plan. 

It became clear that the government needed to implement binding due diligence regulation. It also became clear that the drafting process would have to begin as soon as possible for a law to be passed before the general election in September 2021. 

II. Current drafts

Saage-Maaß turned to the different proposals for a Lieferkettengesetz: The government’s position paper from the Ministry of Development and the Ministry of Labour as well as civil society’s model law. Contrary to what the government currently envisages, Saage-Maaß emphasized the need to include small or medium-sized companies that operate in high-risk areas. 

The role of private international law must not be neglected. The question turns on whether or not the whole of the Lieferkettengesetz will be an overriding mandatory provision, or merely the due diligence obligation itself. 

Civil society organizations are particularly critical of so-called “safe harbor” provisions. These safe harbor provisions allow companies to be exempted from liability if they are part of certain multi-stakeholder initiatives (MSIs). All panelists agree, however, that as of today, no MSI meets the standards set out by the OECD. In its report, the Institute for Multi-Stakeholder Initiative Integrity (MSI Integrity) comes to the same conclusion: “MSIs are not effective tools for holding corporations accountable for abuses, protecting rights holders against human rights violations, or providing survivors and victims with access to remedy.” 

For an overview of other aspects of the legislative proposals, such as the burden of proof, please see the foregoing blog series “Corporate (Ir)responsibility Made in Germany”

III. EU-wide discussion

In April 2020, European Commissioner for Justice, Didier Reynders, announced that the Commission commits to legislation on mandatory due diligence. Patz emphasizes the positive impact Germany’s Council Presidency, beginning July 2020, has had on the endeavor. Germany’s Council Presidency stands out because of its strong affirmative call for a supply chain law and for reforms of directors’ duties. At the beginning of December, the Council published its Conclusion on Human Rights and Decent Work in Global Supply Chains, where it calls on the European Commission to launch an EU Action Plan by 2021 (n. 45) and to table a proposal for an EU legal framework on corporate due diligence (n. 46). According to Patz, this constitutes a strong political signal. This strong call is reinforced by three Committees, the Human Rights CommitteeDevelopment Committee, and the Legal Affairs Committee, that also spoke out in favor of civil liability. 

Another strong political signal was sent by the EU Fundamental Rights Agency, which in its report “Business and Human Rights – Access to Remedy” called for significant changes pertaining to the reversal of the burden of proof, class actions and procedural mechanisms in order to facilitate access to justice for those affected. 

The work of German MEP Anna Cavazzini (Greens) should be highlighted, too. In the European Parliament she pushed for an additional enforcement mechanism in the form of trade restrictions. Products that benefitted from human rights abuses along the supply chain should not have access to the European single market. In order for the trade restrictions to be lifted, remediation ought to be paid. This initiative counters criticism from civil society that points out that due diligence laws often have the effect of targeting whole sectors of one particular economy. Adopting additional trade restrictions allows for a much more targeted approach. 

In her report on an anti-deforestation legal framework, Delara Burkhardt(S&D) also advocated for civil liability. Companies that exercise control over companies should be held liable, even where it was not directly them, but the other company that committed an unlawful act. In order for this liability mechanism to be effective, Burkhardt advocates for a presumption in favor of control. This helps to balance the information deficit litigants suffer because they do not have access to internal corporate documentation. 

IV. Conclusion 

At the beginning of the roundtable discussion, Duval pointed out that Germany’s stance on any binding due diligence regulation will be decisive. Germany’s role in the EU-wide discussion can hardly be overstated. Germany amounts to 30% of all EU exports, and to 20% of all imports. Factoring in France’s loi de vigilance, both countries together could put enough pressure on the European legislators to push for an EU-wide mandatory due diligence regulation. 

Germany is as close as it has ever been to adopting a Lieferkettengesetz. Yet, the process has come to a halt. The government position paper should have been discussed in the Cabinet at the end of last year for the law to be adopted in 2021. All ministers have to agree, afterwards the proposition will go to Parliament. Heydenreich said that the law will have to be adopted in May, or June the latest; Parliamentary session ends in July. 

At least Germany’s involvement in the EU-wide debate looks promising. Germany’s Council Presidency as well as individual German MEPs have had a tremendous impact on the adoption of an EU-wide due diligence regulation.

New Event! Corporate (ir)responsibility made in Germany - 27 November - 3pm (CET)

On 27 November, we will host a digital discussion on Germany’s approach to corporate (ir)responsibility for human rights violations and environmental harms in the supply chains of German businesses. This event aims to analyse the evolution of the business and human rights policy discussion in Germany and its influence on the wider European debates on mandatory human rights due diligence EU legislation. Germany is the EU’s economic powerhouse and a trading giant, hence its position on the (ir)responsibility of corporations for human rights risks and harms throughout their supply chains has major consequences for the EU and beyond.


Currently, Germany is debating the adoption of a supply chain law or Lieferkettengesetz. This would mark the end of a long political and legal struggle, which started in 2016, when the German government adopted its National Action Plan (NAP) 2016-2020. Germany’s NAP, like many others, counted on voluntary commitments from businesses to implement human rights and environmental due diligence throughout their supply chains. Unlike other NAP’s, the German one also included a monitoring process, which tracked the progress businesses made during that four-year period.

The final report, which was published in September, showed that only roughly 13-17% of German businesses implemented the voluntary due diligence measures encouraged in the NAP. On the basis of these rather disappointing results, as required by the coalition agreement between the two governing parties, a draft for a Lieferkettengesetz should have been presented to the Cabinet this autumn. However, the Ministry for Economic Affairs and Energy, backed by business lobby groups, strongly opposes any form of civil liability for human rights violations committed within supply chains and managed until now to delay the process.

Our discussion aims to review these developments and highlight the key drivers behind the (slow) movement towards a Lieferkettengesetz. Weaving political insights with legal know-how, our speakers will provide a comprehensive overview (in English) on Germany’s positioning in the business and human rights discussion and its potential influence on the future trajectory of a European legislation.



To register for this event, please click here. You will receive a link before the start of the event.

For enquiries, contact

Winter academy: Due diligence as a master key to responsible business conduct

On 25-29 January 2021, The Asser Institute’s ‘Doing business right’ project is organising an online winter academy on ‘Doing business right: Due diligence as a master key to responsible business conduct’.

This academy brings together students, academics and professionals from around the world and provides a deep dive into the due diligence process as a strategy to achieve responsible business conduct.

Learn more and register here. 

Corporate (Ir)Responsibility Made in Germany - Part II: The Unfinished Saga of the Lieferkettengesetz - By Mercedes Hering

Editor's note: Mercedes is a recent graduate of the LL.B. dual-degree programme English and German Law, which is taught jointly by University College London (UCL) and the University of Cologne. She will sit the German state exam in early 2022. Alongside her studies, she is working as student research assistant at the Institute for International and Foreign Private Law in Cologne. Since September 2020, she joined the Asser Institute as a research intern for the Doing Business Right project.

In Part II of this blog series, I intend to outline the different proposals for a Lieferkettengesetz. First, the Initiative Lieferkettengesetz’s model law, secondly the proposal submitted by the Ministry for Labour and Social Affairs and the Ministry for Economic Cooperation and Development, and lastly, I will present the amendments pushed by the business sector and the Ministry for Economic Affairs and Energy.More...