SUPPLY CHAIN LAW

Get your business ready now and avoid penalties

Let’s discuss how you can enhance your image, secure your competitiveness, increase your sales and expand your service portfolio through employee qualification in the field of sustainability.

In our globalized economy, a global mindset is needed to effectively protect people and the environment in supply chains.

The Supply Chain Due Diligence Act (LksG) – or Supply Chain Act – has been in force since 2023 and is aimed at companies based or established in Germany. It calls on companies to establish appropriate and effective risk management in all business areas, which is integrated into all business processes. The company must document that no human rights violations occur in its entire supply chain.

However, this Supply Chain Law for companies is not only intended to improve the human rights situation. The new due diligence obligations are also intended to contribute to greater sustainability, less environmental destruction, a reduction of child labour and protection against the exploitation of people by precisely targeting suppliers.

If the Supply Chain Act is still a big question mark for your company and you are wondering where to begin, we have the solution. We can prepare your workforce on our interactive learning experience platform for the implementation of the German Supply Chain Act.

This allows your company to comply with the new law from the outset and avoid high financial penalties.

Companies in Germany with more than 3,000 employees are legally obligated to comply with their due diligence obligations within the supply chain. The aim of this new legal regulation is to improve supply chain transparency and to respect internationally recognized human rights.

From 1 January 2024, this threshold will fall to 1,000 employees for affected companies.

In the event of LkSG violations, for example due to lack of preventive measures or other requirements, companies face periodic penalty payments and fines depending on their annual turnover.

These can amount to up to 8 million euros or up to 2 percent of global annual sales. The turnover-based framework for fines only applies to companies with more than 400 million euros in annual turnover.

With the adoption of the Supply Chain Act, the German government has opened a new chapter with regard to corporate due diligence. Companies must now bear basic responsibility for their supply chains and avoid human rights violations and environmental pollution. We train your employees to meet your due diligence obligations and requirements as well as to act in accordance with the LkSG:

• Due diligence: Taking responsibility
  Under the Supply Chain Act, companies must adopt and communicate a policy statement on human rights strategy. This includes the results of the risk analysis, measures for prevention and remediation, procedural descriptions, the appointment of a human rights officer, clear responsibilities and preventive measures.
• Due diligence: Identifying risks
  Companies need to be transparent about what their supply chains look like and what human rights and environmental risks are involved. Risk analysis must distinguish between the direct impact of the company, contractual relationships with suppliers and complex business relationships without direct contractual arrangements. If a company determines that a violation of human rights or environmental requirements has already occurred or is imminent in its own business or with a direct supplier, remedial action must be taken. These remedies are designed to stop these injuries and prevent further damage.
• Due diligence: Minimizing risks
  Based on the risk analysis, companies take preventive measures to prevent violations in their business areas. These include contractual human rights clauses, appropriate procurement strategies, training for employees and suppliers as well as regular control measures.
  

• Due diligence: Informing and reporting
  The law also requires continuous reporting on the measures taken and violations within the framework of the Supply Chain Act. An annual report must be submitted to the Federal Office of Economics and External Control (BAFA) four months after the annual financial statements of the company and is intended to provide information on the risks identified, measures taken, evaluation of the effects and effectiveness as well as future preventive measures.

• Due Diligence: Allowing for complaints
  Companies must establish a complaints procedure that’s open to all stakeholders involved who are affected by or have knowledge of human rights violations. The process should be transparent, fair and accessible to all, and companies should encourage exchanges with employees and suppliers in the design of complaint management.