Enhance supplier risk management and supply chain transparency through network-enabled collaboration to achieve compliance as required by the German Act on Corporate Due Diligence Obligations in Supply Chains.
Germany’s new supply chain due diligence act (LKSG)
What is the German Supply Chain Due Diligence Act?
The Act mandates large businesses (headcount of at least 3,000 employees in that country or abroad) across industries to monitor their supply chain functions for human rights violations. It also expects companies to facilitate checks and balances that prevent environmental degradation.
In short, the Act places the onus on companies to stay aware, agile, and proactive about their due diligence obligations within the ambit of supply chain operations. Starting Jan 01, 2024, companies with 1,000 employees or more will also come under stipulations of this legislation.
Applicable from From January 2023
with 3,000 + employees-
German Companies or branches located in Germany
To fulfill the requirements of the Germany’s new Supply Chain Due Diligence Act (LkSG) and ensure vendors are as compliant as possible, organizations should conduct human rights and environmental due diligence using the following framework:
Declarations and Due Diligence
Risk Analysis and Risk Management System
Documentation of due diligence, annual reporting
What are the obligations for affected companies?
- Establishing a risk management system
- Issuing a policy statement
- Performing regular risk analyses
- Establishing preventive measures and remedial measures within the company’s own field of business and in relation to any direct suppliers
- Establishing a complaints procedure
- Documentation and reporting
What are the penalties for violations?
It’s important to note that the cost of not complying could be significant: penalties and fines up to 2% of annual revenues and exclusion from public tenders for up to three years. Not to mention the risk of damage to your brand and resulting revenue loss.
Penalties
Fines of up to €800,000 or up to 2% of their average annual global turnover
Consequences
Exclusion from winning public contracts in Germany up to 3 years.
Are you prepared for the new LkSG act?
To understand your own position with respective to the compliances,
we offer an easy self-assessment to check your company’s readiness.
How SCM Cokcpit can help ?
SCM Cockpit’s digital solutions for compliance are designed to handle several nuanced aspects, such as supplier risk assessment, risk scoring, robust surveying, dynamic grievance management, and powerful reporting.
Let’s delve a little deeper into the features and benefits of using our digital compliance management solution, to understand how it helps organizations achieve the objective of regulatory compliance adherence and management.
If you would like to understand more about how our SCM Cockpit allows you to collect and manage data to comply with new regulation, please contact us directly.
SCM Cockpit Benefits
To fulfill the requirements of the Germany’s new Supply Chain Due Diligence Act (LkSG) and ensure vendors are as compliant as possible, organizations should conduct human rights and environmental due diligence using the following framework:
- Risk Evaluation
- Compliance Monitoring
- Holistic view of risks
- Documentation and reporting
We are here to support you.
The time to ensure that your company is prepared for the upcoming changes is now – and we are happy to support you.
Please contact us if you would like to understand more about how our SCM Cockpit platform allows you to collect and manage data to comply with new regulations.
We are excited to be part of your sustainability story.