Definition of supply chain law:

The Supply Chain Act, also known as the Due Diligence Act, is a legal regulation that obliges companies to comply with and monitor human rights and environmental standards along their entire global supply chains. At the heart of this law is the idea of corporate due diligence. Companies must take measures to identify, prevent and mitigate risks to human rights and the environment in their supply chain and they must report on their efforts.

Significance and effects:

The Supply Chain Act has far-reaching significance and implications for companies that operate internationally. It represents an obligation that goes beyond simply making a profit and also demands social responsibility. Companies can no longer avoid human rights violations or environmental damage in their supply chains by pointing the finger at their business partners. Instead, they must take proactive measures to avoid such problems.

The requirements of the Supply Chain Act can be a challenge for companies, especially those with long and complex supply chains. They must now introduce mechanisms to monitor compliance with human rights and environmental standards along their supply chain. This may involve implementing new processes, training employees and, where appropriate, revising relationships with suppliers.

On the other hand, the Supply Chain Act has the potential to have a positive impact on society and the environment. By obliging companies to respect human rights and environmental standards, the law can help to improve working conditions in supply chains and reduce environmental damage. It can also encourage companies to adopt more sustainable business practices, which can benefit both the companies themselves and society as a whole in the long term.

The Supply Chain Act represents a significant step towards a more responsible global economy. It ensures that companies do not conduct their business practices at the expense of people and the environment. By strengthening corporate responsibility for their supply chains, the law can help promote sustainable development and improve living conditions for people around the world.