Supply Chain Status Detection Law: Corporate responsibility for compliance with human rights
Supply Chain Status Detection Law (LKSG) entered into force on 1 January 2023. It regulates corporate responsibility for the first time in compliance with human rights in supply chains.
The basic elements of status determination obligations are as follows:
- Establishing a risk management system to determine, prevent or minimize human rights violations and damage risks to the environment.
- The obligation of the law to comply with defined prevention and improvement measures.
- Complaint procedures and regular reporting.
Status Detection Obligations Applies to:
- A company's own commercial activities.
- Actions of a contracted partner.
- Activities of other (indirect) suppliers.
The law initially applies to companies:
- At least 3,000 employees in 3,000 Germany since 2023.
- At least 2024 out of 1000 employees.
The supply chain law includes a comprehensive catalog of the internationally accepted human rights contract, including the following:
- Prohibition of child labor, slavery and forced employment.
- To ignore business health and safety.
- Cutting an appropriate fee.
- Ignorance of the right to establish trade unions or employees.
- Rejection of access to food and water.
- O unlawful deprivation of land and livelihoods.
If companies do not comply with their legal obligations, fines can be applied. These may be up to 8 million euros or up to 2 percent of global annual sales. The turnover -based fine frame applies only to companies that sell more than 400 million euros per year.
The Federal Economy and Export Control Office (BAFA) has applied the supply chain law in its new field office in Borna since January 1, 2023. BAFA has extensive control powers, for example:
- Enter the workplaces.
- Request information and review the documents.
- Ask companies to take concrete steps to fulfill their obligations and apply the penalty payments.
Companies develop bafa and publish declarations to support the fulfillment of status detection obligations. BAFA, Proceedings Own Supply Chain Lawon the websiteoffers.
How can ComplyMarket help you:
Establishing a risk management system and doing risk analysis
- Adopting a policy statement on corporate human rights strategy
- Creating preventive measures
- Immediate implementation of corrective measures in case of legal violations determined
- Creation of the complaint procedure
- Documentation and reporting requirements to fulfill the requirements of status detection
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