Law on reasonable diligence in terms of supply chain: business responsibility for human rights
The Supply Chain Due Diligence Act (LKSG) entered into force on January 1, 2023. It regulates for the first time the responsibility of companies in terms of human rights respect in supply chains.
The main elements of reasonable diligence obligations include:
- The implementation of a risk management system to identify, prevent or minimize the risks of human rights violations and environmental damage.
- Obligation to comply with the prevention and remediation measures defined by law.
- Complaint procedures and regular reports.
Reasonable diligence obligations apply to:
- A business's own business activities.
- The actions of a contractual partner.
- The actions of other suppliers (indirect).
The law initially applies to companies having:
- At least 3000 employees in Germany from 2023.
- At least 1000 employees from 2024.
The supply chain law contains an exhaustive catalog of eleven international conventions recognized in matters of human rights, in particular:
- Prohibition of child work, slavery and forced work.
- Contempt for occupational health and safety.
- Restrained from an appropriate salary.
- Ignorance of the right to train unions or workers' representatives.
- Refusal to access food and water.
- Illegal deprivation of land and livelihoods.
Fines can be imposed if companies do not comply with their legal obligations. These can reach 8 million euros or up to 2% of world annual turnover. The turnover based on turnover only applies to companies whose annual turnover exceeds 400 million euros.
The Federal Office for the Economy and Export Control (BAFA) has implemented the law on the supply chain at its new Borna office from January 1, 2023. The BAFA has large control powers, in particular:
- Enter the commercial premises.
- Request information and inspect the documents.
- Ask companies to take concrete measures to fulfill their obligations and enforce them by imposing penalties.
To support companies in the implementation of their due diligence obligations, the BAFA develops and publishes documents. Bafa makes the documents available on his ownWebsite of the supply chain law.
How complymarket can help you:
- Implementation of a risk management system and carrying out a risk analysis
- Adoption of a statement of business strategy in matters of human rights
- Establishment of preventive measures
- Immediate implementation of corrective measures in the event of violations found
- Implementation of a complaint procedure
- Documentation and report requirements to meet reasonable diligence requirements
- Complydoc: is an intelligent computer solution and the first cloud -based code solution for the management of the sustainability of the supply chain, chemical compliance and products in order to collect information from suppliers.