Supply Chain Due Diligence Act

What is the Supply Chain Due Diligence Act?

Effective since January 1, 2023, the Supply Chain Due Diligence Act (LKSG) aims to enforce strict guidelines addressing child labor, fair wages, and environmental sustainability in global supply chains. The law benefits various stakeholders within supply chains, including businesses and consumers. Due diligence obligations extend beyond a company's direct operations to include contractual partners and indirect suppliers.

Benefits of the LKSG‍

• Enhanced transparency and accountability
• Improved ethical standards and sustainability
• Increased consumer trust and enhanced corporate reputation
• Strengthened risk management capabilities

Which companies are affected?

Since January 1, 2023, the LKSG is mandatory for companies with at least 3,000 employees. Starting from 2024, it will also apply to companies with at least 1,000 employees. This regulation impacts all companies headquartered in Germany or having a primary branch or office there.

What do companies need to consider?

Companies are required to identify, evaluate, and prioritize risks within their supply chains. Based on these findings, they must publish a policy statement and develop suitable measures to address any violations.

Key due diligence obligations include:
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• Clearly defining internal responsibilities
• Establishing risk management and grievance mechanisms
• Conducting regular risk analyses
• Publishing a policy statement
• Implementing preventive measures
• Taking corrective actions
• Documenting and reporting on supply chain management

Creating transparency in your supply chain

Are you facing extensive data management tasks due to the Supply Chain Due Diligence Act? inics supports you in selecting innovative technologies and tools to ensure transparency and compliance in your supply chains. This enables you to promote sustainable business practices and improve decision-making processes.

For more information about the Supply Chain Due Diligence Act, visit the website of the Federal Ministry of Labour and Social Affairs.