Supply Chain Diligence

Supply Chain Due Diligence Act: Corporate responsibility for human rights compliance

Supply Chain Due Diligence Act (LkSG) 1, 2023-. It regulates corporate responsibility for human rights compliance in the supply chain for the first time.

Key elements of a due diligence obligation include:

• identify risk of human rights violations and environmental damage, Establishing a risk management system to prevent or reduce it."
• obligation to comply with the prevention and remedial measures defined in law."
• Complaint Procedures and Regular Reporting."

Due diligence applies:

• A company's own business activities.
• contractual partner's work.
• actions of other (indirect) providers."

The law applies primarily to companies:

• 20233,000 in Germany since > employee.
• 2024 to at least 1,000 employee.

The Supply Chain Act contains a complete catalogue of eleven internationally recognized human rights conventions, which includes:

• child labour, slavery And prohibiting forced labor.
• Ignoring occupational health and safety."
• withholding a decent wage.
• Ignoring the right to form trade union or employee representatives."
• Denied access to food and water.
• unlawful deprivation of land and livelihoods."

Penalty may be imposed if the company fails to comply with its legal obligations." 8 million euros or 2 percent. The turnover-based penal structure is only 400 million euros."

Federal Office of Economics and Export Control (BAFA) 1, 2023 has implemented the Supply Chain Act in its new field office in Borna. BAFA- has far-reaching power of control, eg:

• Enter the business premises.
• Claim information and check documents.
• Request companies to take concrete steps to meet their obligations and enforce it by paying penalties."

To assist companies in implementing their due diligence obligations, BAFA Creates and publishes handouts. BAFA makes available handouts in its own supply chain law website

How to ComplyMarket can help you:

• setting up a risk management system and doing a risk analysis
• Adoption of a policy statement of the Corporate Human Rights Strategy
• Establishing preventive measures
• immediate implementation of corrective measures in case of identified legal violations
• Establishing a complaints mechanism
• Documentation and reporting requirements to meet due diligence requirements
• ComplyDoC: Supply chain sustainability to collect information from suppliers, An intelligent IT and the first open-source code cloud solution for chemical and product compliance management."