Legal and Policy Debrief: 1-28 January

German Supply Chain Act:

On 16 January, a first reading on a proposed legislative act by the government to change the German Supply Chain Act, which entered into force in January 2023, was held in German parliament.

The proposal (drafted in September 2025) aims to abolish the reporting obligation under the law with retrospective effect from January 2023. While all other due diligence obligations of the law would remain intact, only severe violations of the Act would be punished and fines will be issued in those cases only.

Despite the proposed watering down of the Act, Germany will still be required to implement legislations passed at the EU level, including the CSDDD, CSRD, EUFLR and EUDR which go beyond the scope of the German Supply Chain Act in many aspects.

Loi de Vigilance:

A recently published study by professors of the ESCP Business School, Berlin and Arizona State University investigated the impacts of the French due diligence law – the Loi de Vigilance – on implementing companies’ input costs, output scale and operational efficiency.

The analysis of 73 publicly listed companies subject to the law found that it increased upfront expenditures but resulted in decreased costs over time. The law also steadily increased operational efficiency over time, although to varying degrees depending on the sector of the company. Measured effects on the output scale were not significant.

This suggests that the Loi de Vigilance did not economically hurt in-scope companies and even contributed to improved efficiency. It is in line with findings of a 2025 study on the Loi de Vigilance which found no evidence that the law significantly impacted the likelihood of profit of regulated companies after its implementation.

Notes/Further Reading:

• The World Benchmarking Alliance has published its 2026 assessment of over 2,000 of the world’s most influential companies, ranked and measured on their respective impacts.
• It found that since the last benchmarking, 80% of companies have improved their overall scores under the Corporate Human Rights Benchmark. Motor vehicle manufacturers achieved the largest sectoral score increase (16%), although it remains the lowest-scoring sector of those assessed.
• Yet the report also found that only one in ten companies identify and assess human rights risks in their supply chains (14% in high-risk sectors such as food and agriculture) and less than 5% disclosed that they paid their workforce living wages.
• Meaningful stakeholder engagement remains an area where significant improvement is needed, with 13% of companies having reported to involve stakeholders in risk identification and 4% in their responses to risks. In addition, under 25% of companies sought feedback on gender-related issues from stakeholders. Meaningful stakeholder engagement is also an area for improvement regarding just transition efforts as many companies do not include their workforce in just transition planning.

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Deforestation Legislation

Updates:

A recently undertaken nature security assessment by the UK government warns that biodiversity collapse will threaten UK national security and prosperity. The assessment warns that many global food production areas are threatened and of resulting impacts on the UK food system.

While highlighting the cascading risks and impacts of biodiversity collapse, the report also singles out the Amazon rainforest, the Congo rainforest, and the Boreal forest (among others) as ecosystems particularly significant to the UK.

The NGO Forest Coalition says this should serve as a wake-up call for the UK government to curb its contributions to deforestation which was one of the objectives of the UK Environment Act of 2021. This legislation, among other things, restricts risk commodities that are produced ‘illegally’ under producer country laws to be sold in the UK.

However, the implementation of the forest risk regulations, itself a part of the UK Environment Act, has been postponed since 2021 and secondary legislation necessary to operationalise it is still forthcoming. In addition, the limited scope (deforestation that is illegal in the producer countries), has been criticised as too narrow and lagging the scope of the EUDR.

Further Reading/Listening:

• Last week, the EU Parliament voted to refer the Mercosur Agreement, a free trade deal between the Mercosur states (Argentina, Brazil, Bolivia, Paraguay and Uruguay) and the EU, to the European Court of Justice for a legal opinion on whether the agreement is in line with EU treaties – a process estimated to take around 2 years. This came after the EU Commission’s President, Ursula von der Leyen, signed the agreement on 17 January after 25 years of negotiations.
• Much of the criticism has centred around potential adverse environmental and social impacts, specifically deforestation, as the trade deal would promote export of products that drive deforestation, such as soybeans, beef and bioethanol.
• The agreement includes the implementation of a rebalancing mechanism which allows a party to the deal to demand compensation if they consider a measure taken by the other party (for instance, a legislation) to negatively impact their trade relationship and negate its own economic benefits of the agreement. Civil society groups fear that this will be used to challenge the EU Deforestation Regulation. In addition, they allege that greenhouse gas emissions and pesticide pollution are likely to rise significantly as a result of the agreement.

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Forced Labour Legislation: Withhold Release Orders & Uyghur Forced Labor Prevention Act

Updates:

The US Customs and Border Protection has banned the import of tyres made by China’s Linglong Tire Co. produced in Zrenjanin, Serbia on suspicion of the use of forced labour by the company. The CBP said that a withhold release order was issued against all tyres made in the Zrenjanin plant due to evidence “reasonably indicating the use of forced labour in their production”, an official statement read.

This is not the first time, forced labour has been alleged at this factory. In 2021, the EU Parliament adopted an urgent resolution on forced labour stating its concern over forced labour conditions at the production plant, echoed by UN experts in 2022.

In the past, it has been reportedthat migrant workers (from Vietnam and China) were hired by recruitment agencies and brought to the factory. Many had their passports confiscated, were forced to pay recruitment fees, found themselves in debt bondage and lived in precarious conditions.

Further reading:

• UN experts have expressed deep concern over forced labour conditions affecting Uyghur, Kazakh and Kyrgyz minority groups and Tibetans within Xinjiang and in other parts of China.
• In the press release, the experts outline the persistent patterns of State-imposed forced labour which is enabled through the State’s “poverty alleviation through labour transfer programme”, coercively transferring Uyghurs and members of other minority groups to work in Xinjiang and across other regions.
• In addition, experts also raised concerns over similar schemes. Tibetans are subjected to the Training and Labour Transfer Action Plan, which enforces coercive methods such as military-style vocational training methods. It is estimated that close to 650,000 Tibetans were affected by these plans in 2024.

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Spotlight

The US has announced its withdrawal from 66 UN and other multilateral groups including key climate and development bodies.

US President Donald Trump has ordered the withdrawal of the United States from foundational international agreements and multilateral bodies, including the UN Framework Convention on Climate Change (UNFCCC), the International Union for the Conservation of Nature (IUCN) and regional UN Economic and Social Commissions (ECOSOCs).

While the White House claims that that these bodies are “against American interests”, many warned that this has outdone decades of US leadership and leaves the country in a less secure and less prosperous position. Experts further underline that it hinders the country’s ability to fight cross-border impacts (such as climate change and environmental impacts) and will leave it more vulnerable to climate change impacts.

Regarding international action on climate change, Trump’s withdrawal did not come as a surprise following the US exit from the Paris Climate Agreementfor a second time and the absence of a US delegation at COP30 in 2025.

Experts highlight that the treaty itself is not reliant on US participation due to the 195 remaining countries. However, impacts might be felt on the reporting of emissions (which the country had already stopped) and due to the absence of continued US funding on these initiatives.