Görg: Blockchain Technologies can Help Improve Transparency of Global Supply Chains

23rd July 2020
KCG Secretary

The German Federal Government is working on a Supply Chain Law that will require German companies with more than 500 employees to better ensure that both human rights as well as environmental sustainability standards along their supply chains are well protected and/or followed. The Federal Minister of Labour and Social Affairs, Hubertus Heil, expects that the Draft Law can be passed by the cabinet in August and thus can enter the legislative process soon with the goal of being effective in 2021. The law and the regulations should, however, not be restricted to German firms only in the long run. Instead, both the Federal Ministry for Economic Cooperation and Development and the Federal Ministry of Labour and Social Affairs have indicated that they will advocate an EU-wide regulation in this regard as well.

Although many can understand the key relevance of the goal of the law to avoid, for example, child labour, exploitation and discrimination or environmental destruction activities along the global supply chains, the reactions from the private sector to the Supply Chain Law in preparation are rather negative. Concerns are mainly caused by the high complexity of the global supply chains nowadays that could make it difficult and costly for German producers to trace all steps of their suppliers along the chains. Many business representatives argue that tracing all steps in production as being required by law will negatively affect the market competitiveness of German companies worldwide. It may also reduce the attractiveness of developing and emerging economies as destinations of foreign direct investments in general.

Prof. Holger Görg, Ph.D. (KCG Managing Director) emphasized in media interviews that “The way how the global supply chains are structured nowadays makes it indeed difficult for firms to control suppliers who are more than two or three production steps further away.” But being difficult does not mean impossible. Here advanced digital technologies can play an essential role. He argued, for example, that “new technologies such as blockchain technologies can help improve the production transparency and thus make it possible for producers in Germany to trace all relevant production steps along the supply chains”. In addition to the use of new technologies, he also emphasized that companies could influence their suppliers by contractually regulating their production activities to further help avoid human rights violations in production.

More information about Görg’s interviews can be found here:


Involved Team members