Since last year, Serbian companies acting as suppliers to German firms have been facing new requirements under the German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG). This law significantly impacts suppliers worldwide, including Serbia, and sets high standards concerning human rights, labor rights, and environmental sustainability.
At an event organized by the Legal Committee of the German-Serbian Chamber of Commerce (AHK), held on September 17, 2024, the impact of this law on companies operating in Serbia was discussed. The event also covered practical experiences of Serbian companies that are suppliers to German firms. The Supply Chain Due Diligence Act applies to all companies within the supply chain of German firms, regardless of their location. This means the law also applies to foreign companies operating in Vojvodina that supply German companies. Here are some of the key provisions of this law:
Key Obligations of the Law
The Supply Chain Due Diligence Act encompasses a broad range of prohibitions to ensure adherence to human rights, labor rights, and environmental standards:
- Human Rights: Prohibition of child labor, forced labor, and slavery; trafficking in human beings; discrimination based on gender, race, ethnic origin, religion, disability, or sexual orientation. It also prohibits violations of the freedom of movement, the right to fair work, a dignified life, adequate housing, healthcare, education, and forced relocation of communities or workers.
- Labor Rights: Respect for the right to unionize and engage in collective bargaining; prohibition of inhumane working conditions such as unfair wage payment, excessive working hours, and denial of rest and vacation rights. The law also prohibits unsafe working conditions and abuse of employment contracts.
- Environmental Standards: Prohibition of unsustainable use of natural resources such as water, forests, and minerals; pollution of water, soil, and air; discharge of toxic materials without adequate environmental measures; deforestation, destruction of habitats for endangered species; use of conflict minerals; violation of local communities’ rights to natural resources and land; and destruction of cultural and natural heritage.
These prohibitions are part of a broader approach that the German Supply Chain Due Diligence Act seeks to implement, ensuring that global supply chains are ethical and sustainable. These measures help German companies and suppliers operate according to high standards and promote responsible business practices.
Serbia as a “Low-Risk Country”
Good news for local firms is that Serbia, according to this law, is classified as a “low-risk country” due to its high level of compliance with European Union legislation. This means that Serbian companies generally meet the required criteria. However, German firms will conduct regular checks, including risk assessments, questionnaires, and due diligence processes, to ensure their suppliers comply with the law.
Opportunity for Serbian Companies
This is an opportunity for Serbian companies to improve operations, enhance internal procedures, and remain key partners for German companies. Larger firms in Serbia, which already collaborate with the German market, have begun implementing the required standards and procedures. The law also allows smaller suppliers to strengthen their position through transparency and sustainability.
For those seeking more detailed information should check this link.
