Exporters to Germany likely to face more regulatory burdens from January 2023

By Sanath Nanayakkare

From 1st January 2023, exporters to Germany will have to comply with a new legal framework governing sustainability in supply chains. This will be the norm applicable for all countries that export their products to Germany including Sri Lankan entities that already have high standards in terms of sustainability practices in their supply chains.Reportedly this is necessitated as German importers will have to comply with pre-defined sustainability related reporting rules, which will be monitored by the Federal Office of Economic Affairs and Export Control in Germany.

This new legal framework is expected to create an enormous pressure on suppliers who export their products to Germany. High-ranking decision makers from Sri Lanka’s exporting businesses and key Sri Lankan institutions such as the Export Development Board (EDB) were concerned about these new laws to come into effect as they needed a clear picture of what actually expected of them as exporters.Further, Sri Lankan entities that export to Germany and already have high worker rights standards were concerned as this new law would also involve ‘Human Rights Due Diligence’ legislation worldwide.

In this backdrop, Markus Löning, former Commissioner of Human Rights of the German Government and Managing Director of the Berlin based think tank and consultancy Löning Responsible Business and Human Rights (Löning) and JAAR Corporate Solution organised a conference on 12th July at the Granbell-Hotel in Colombo on “Sustainable Supply Chains -Driver for Global Market Access”.The event was attended by high-ranking decision-makers from exporting businesses, associations, international organisations, and Sri Lankan institutions.

During the event, a corporation agreement was signed between Löning and JAAR Corporate Solutions to establish a management consultancy specialised on sustainability, corporate finance, business economics and regulatory services in order to help Sri Lankan exporters to Germany to adapt their internal processes to comply with sustainability norms. The objective of this initiative is to support Sri Lankan exporters with regard to corporate due diligence in human rights enabling them to comply with sustainability standards and legislation such as the German Act on Sustainable Supply Chains.

Joint Managing Director of Jaar Corporate Solutions Andreas Hergenröther stated: “During the past years, sustainability has become a key factor for market access to the EU, the US, and other like-minded countries. Legislation like the German Act on Corporate Due Diligence in Supply Chains has created an enforceable legal frame for sustainability in supply chains.”

German Ambassador Holger Seubert underlined in his welcome-remarks,” So far, the German law is the most ambitious and far-reaching Human Rights Due Diligence legislation worldwide”. The keynote speaker Markus Löning pointed out, how consumer-driven industry standards and continuous legislation in Europe and the US have forced exporters worldwide to adapt their internal processes to comply with sustainability norms.

He underlined that new German Act created for the first time a legal liability of importers in Germany: “From 1st January 2023 German importers will have to comply with pre-defined sustainability related reporting rules, which will be monitored by the Federal Office of Economic Affairs and Export Control. This will create an enormous pressure on suppliers from all over the world”.

The cooperation agreement was signed between Löning and JAAR Corporate Solutions. Löning in cooperation with JAAR Corporate Solutions – a management consultancy specialised on sustainability, corporate finance, business economics, regulatory services – will support Sri Lankan exporters with regard to corporate due diligence in human rights, enabling them to comply with sustainability standards and legislation such as the German Act on Sustainable Supply Chains.