GSC Support Fund
Social responsibility in the supply chain
Since 2023, the Supply Chain Act obliges German companies to implement their environmental and social responsibility policies with their suppliers. As a result, these are subject to new requirements. To ensure that small and medium-sized enterprises (SMEs) in Asia, Africa and Latin America can meet these demands, KfW has founded the Global Supply Chain Support Fund (GSC Support Fund) together with Aavishkaar Capital on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ).
Under Germany’s Supply Chain Act (Lieferkettensorgfaltspflichtengesetz), companies in the country are expected to comply with minimum environmental and social standards along the entire value chain. However, this is not always possible at present – especially in the case of small and medium-sized enterprises.
In many places, there is a lack of occupational health and safety, environmental friendliness and social justice in the workplace. This may include low pay or women suffering employment discrimination, for instance – in part because local legislation is often weak or poorly enforced. Since the German Supply Chain Act has entered into force, along with the European equivalent, SMEs that have not yet been able to meet or prove compliance with environmental and social standards will be at a serious disadvantage. They run the risk of losing European businesses as customers. In many cases, large companies are more likely to be able to afford the costs and effort involved in maintaining their position as suppliers to groups of companies in Europe.
KfW has therefore joined forces with Aavishkaar Capital to launch the GSC Support Fund – one of many measures initiated by the BMZ in this context. These include the Help Desk Business & Human Rights, which offers German companies free initial advice and referrals, and the regional hubs of the GIZ, which advise local suppliers in partner countries.
On behalf of the BMZ, KfW contributed EUR 50 million to the GSC Support Fund's share capital of USD 250 million, with which the fund launched at the beginning of 2022. It invests in manufacturing companies in partner countries that form part of German and European supply chains. The focus is placed on India, Vietnam, Bangladesh, Cambodia and Indonesia in Southeast Asia, and Kenya, South Africa and Nigeria in Sub-Saharan Africa. Sectors such as agricultural products, textiles, shoes, machine parts, automotive parts and furniture will take priority. The fund assesses the working conditions in companies and initiates changes to accommodate the minimum social and environmental standards. Particular attention is paid to gender equality – for instance, in workplace settings. “It is important that we do not exclude companies in other parts of the world from supply chains that end in Europe, and instead we enable them to implement better due diligence management,” says BMZ Head of Division Anosha Wahidi.
It is estimated that multinationals’ supply chains account for a good four-fifths of global trade and employ around 20% workers, dominating the global economy. As a result, improvements in human rights and environmental and social standards in these supply chains alone would have a major impact.
Learn more about the GSC Support Fund
Share page
To share the content of this page with your network, click on one of the icons below.
Note on data protection: When you share content, your personal data is transferred to the selected network.
Data protection
Alternatively, you can also copy the short link: https://www.kfw-entwicklungsbank.de/s/enzBYuXk
Copy link Link copied