When does the duty to take remedial action arise?
If the company establishes that a violation of a human rights-related or environmental obligation arises from its own area of activity or from a direct supplier, or that, although not yet present, such a violation is imminent, it must immediately take appropriate remedial measures to prevent the violation, bring it to an end, or minimise the impact of the existing violation.
Own area of activity and direct suppliers
A remedial measure taken in the company’s own business area in Germany must bring the violation to an end (Section 7(1)). Where a violation at a direct supplier cannot be brought to an end in the foreseeable future, the company must draw up and implement a concept, with a concrete timetable, to end or minimise it (Section 7(2)). As a rule, the remedial measure taken by the company in its own area of activity abroad and, pursuant to Section 2(6) sentence 3 of the Law, in its own area of activity must be such as to bring the violation to an end.
Preventive measures and stakeholder engagement
Where a risk arises or there is an imminent danger of one arising, preventive measure mechanisms must be established immediately. In determining what these preventive measures will be, companies must work together with interest (pressure) groups. In particular, the Directive, in Article 13, requires companies to engage meaningfully with their employees, trade unions and workers’ representatives and with the individuals and communities whose rights or interests are directly affected (and their legitimate representatives). The climate transition plan duty (former Article 22) was deleted by Omnibus I, and the Act has no climate dimension at all.
The concept: a concrete timetable and the measures to consider
The concept must include a specific timetable. In particular, the following measures must be taken into account when creating and implementing the concept:
- Jointly developing and implementing, together with the company causing the violation, a plan to end or minimise the violation,
- Joining with other companies through industry initiatives and standards in order to increase the likelihood of influencing the party causing the violation,
- Temporarily suspending the business relationship during efforts to minimise the risk.
As can be seen, there is no obligation to terminate the business relationship immediately where a risk materialises or the threat of a risk arises. As a rule, the priority is to bring the violation to an end and to take measures that eliminate and remedy its effects.
When must the business relationship be terminated?
Terminating a business relationship is required only in the following cases:
- Where the violation of a protected legal position or of an environmental obligation is very serious in scale,
- Where, after the period specified in the concept has elapsed, the implementation of the measures developed in the concept has not brought a solution,
- Where no other, milder means are available to the company and an increase in its leverage offers no prospect of success.
Reviewing effectiveness and updating the measures
The effectiveness of the remedial measures must be reviewed once a year and on an ad hoc basis where a significantly changed or expanded risk situation in the company’s own area of activity or at its direct supplier must be taken into account, for example because new products, projects, or a new line of business are being taken on. Pursuant to Section 8(1), the findings obtained from the processing of information must be taken into account. The measures must be updated without delay where necessary.
