Opportunities and risks of a due diligence law

A brief expert report by the Kiel Institute for the World Economy for the IMPULS Foundation analyzes the effects of the law on corporate due diligence in supply chains, which was passed by the German parliament in June 2021. Key findings are that suppliers from developing countries may be deprived of the opportunity to prosper through trade and that the international division of labor will decline. In the worst case, this could lead to a deterioration of the human rights situation in several countries. Mechanical engineering in Germany is particularly affected. For the design of a supply chain law, particularly at the European level, this short report therefore proposes a negative list approach as an alternative.