Corporate Due Diligence in Supply Chains
When it enters into force on 1 January 2023, companies with at least 3,000 employees in Germany, and from 1 January 2024, with at least 1,000 employees in Germany, will be required to comply with specific due diligence obligations under the Act on Corporate Due Diligence in Supply Chains (Lieferkettensorgfaltspflichtengesetz, “LkSG”). The aim is to avoid human rights and environmental risks, minimise them and prevent them from occurring or put a stop to them. This is both a challenge and an opportunity for companies in Germany that compete internationally.
Making compliance with human rights and environmental obligations in global supply chains a legal obligation for companies is neither a novel concept nor a special German approach. With the Act on Corporate Due Diligence in Supply Chains, however, the German legislator is implementing a legal framework that imposes “best effort” obligations on companies to comply with human rights- and environment-related legal standards in their supply chains, some key aspects of which go beyond the standards established to date in other countries. These obligations are largely derived from corresponding international agreements to which the Federal Republic of Germany is a party. The legislative aim is to use the economic position of German companies as an impetus to improve working conditions in production facilities worldwide, to put a stop to human rights violations such as child and forced labour, illegal land grabbing or dangerous working conditions as well as the violation of basic environmental standards.
We have extensive experience from numerous projects and regularly assist clients from different industries with the implementation of an efficient compliance system. We structure supply contract relationships and take precautions against liability risks as well as potential regulatory measures and sanctions.
Current developments and important issues concerning the Act on Corporate Due Diligence in Supply Chains are regularly discussed in our specially created LinkedIn group (note: to join the group, a LinkedIn account is required). We are always available for questions and exchanges on this issue.
Further we would like to help you with a kind of quick test to get a first impression of whether the far-reaching changes will also have an impact on your business practice. This is why we have developed the “Supply Chain Awareness Check”, a legal tech tool that will help you obtain an initial risk assessment for your company. You can use the tool free of charge by using the following link: To the Supply Chain Awareness Check