SUPPLY CHAIN ACT
A digital solution for the German Corporate Due Diligence in Supply Chain Act
The German Supply Chain Due Diligence Act, or LkSG, requires companies to create processes to address human rights and environmental protection along their supply and value chains. With our digital solutions, we support you in screening business partners and supply chains.
Our support for the implementation of the Supply Chain Act
The PROXORA Compliance Platform is a software-as-service solution (SaaS) for the efficient implementation of compliance processes. It also facilitates the fulfillment of the German Supply Chain Act (LkSG). The Third Party Risk Management (TPRM.360) module is used to check, identify and manage risks in the supply chain. As a state-of-the-art digital workflow solution, TPRM.360 supports you both in the initial risk assessment of your suppliers and business partners as well as in the ongoing monitoring of business relationships. A real-time risk analysis and overview of mitigation measures makes it easier for your company to meet the new statutory transparency and reporting obligations. We will be happy to advise you.
Requirements of the Supply Chain Act at a glance
Implementation of a risk management system for the identification, assessment and mitigation of risks incl. measures for remediation in the event of legal violations regarding the Supply Chain Act
- Definition of the person(s) responsible for risk management
- Analysis, weighting and prioritization of risks in the company and with suppliers
- Definition and management of measures to avoid identified risks and to remediate deficiencies
Implementation of a complaints process for identifying and addressing human rights violations and environmental wrongdoing
- Anonymous reporting through publicly accessible channels along the entire value chain
- Barrier-free participation in the complaints procedure
- Confidential and traceable reporting procedure per case
Implementation of a transparent reporting system for compliance with the German Corporate Due Diligence in Supply Chains Act
- Audit-safe documentation on compliance with due diligence requirements
- Creating a policy statement on the risk management concept for the company and for suppliers including update possibility
- Annual report incl. publication and storage obligations according to BAFA
From when does the Supply Chain Act apply in Germany? Who is affected by the LkSG?
The law will initially apply to companies with at least 3,000 employees in Germany from January 1, 2023. From 2024, the second stage of the Supply Chain Due Diligence Act will come into effect and applies to companies with at least 1,000 employees in Germany.
What is the difference between German and European supply chain law?
The German Supply Chain Due Diligence Act (LkSG), which came into effect in 2023, regulates corporate responsibility for the compliance with human rights in global supply chains, including the protection of the environment. This includes protection against child labor as well as the right of fair wages and is intended to strengthen human rights and environmental protection within global supply chains. The LkSG will initially apply to companies with at least 3,000 employees in Germany from 2023, and to companies with at least 1,000 employees from 2024. In addition to prevention and remediation measures, the establishment of complaint channels in supply chains and regular reporting on supply chain management are mandatory.
In addition to the German Supply Chain Due Diligence Act (LkSG), there are other regulations such as the EU Whistleblower Directive and national legislation that require corporations and SMEs to set up complaint or whistleblower channels.
We provide information about the requirements that the Supply Chain Act and other new regulations place on companies and how the individual due diligence obligations can be efficiently implemented with digital PROXORA solutions. Go to contact form
Information on German Corporate Due Diligence in Supply Chains Act
Law on Corporate Due Diligence in Supply Chains as PDF
The draft European Supply Chain Act covers EU companies with more than 1,000 employees and annual global sales of more than €300 million. Non-European companies with more than 1,000 employees are subject to the law if they generate annual sales of €300 million in the EU. The directive addresses areas such as a company’s own business activities, direct and indirect suppliers and products and services. The aim is to require European companies to be more careful along their entire value chain, taking into account social and environmental effects.
The European Council adopts the draft European supply chain law. Subsequently, the EU member states have two years to transpose the directive into national laws. The Supply Chain Act introduced in Germany on January 1st, 2023, is expected to be amended.
European Commission on sustainable corporate governance
More on promoting sustainability in corporate governance and management systems
What opportunities does the Supply Chain Act offer?
Careful management of human rights and environmental risks at your own sites and in the supply chain is an opportunity to optimize processes and positively shape your own entrepreneurial future. PROXORA’s Third Party Risk Management solution (TPRM.360) supports you in these forward-looking steps. Benefit from our multi-faceted experience in supporting our customers with their compliance risk management.
Arrange a personal demo regarding the Supply Chain Act now
See for yourself how our TPRM.360 solution supports you in implementing the Supply Chain Act. Gain insight into how you can map relevant workflows with the modules of the PROXORA Compliance Platform.
What needs to be considered in the Supply Chain Act regarding reporting?
The German Federal Office of Economics and Export Control (BAFA) has published a questionnaire on the reporting obligations according to §10 para. 2 LkSG. Together we develop strategies for a digital and legally compliant implementation of the BAFA questionnaire in your company.
Do you have further questions about the German Corporate Due Diligence in Supply Chains Act?
Are you affected by the Supply Chain Act and would like to meet the challenges in an efficient and economical way using modern IT compliance solutions? Would you like to keep an eye on your suppliers and business partners at all times? We would be happy to show you in a demo how you can implement the digitalization of the whole lifecycle of internal and external business relationships.
Meeting these requirements is no easy task, especially for smaller and medium-sized companies without the necessary resources or expertise. PROXORA’s innovative solutions support directly or indirectly affected companies to effectively and legally implement the Supply Chain Act.
The workflows in PROXORA’s Third Party Risk Management solution (TPRM.360) were developed in close cooperation with experts from Legal & Compliance, Sustainability, Purchasing, Sales and IT-Security.
Would you like to cover the Supply Chain Act with our digital solutions?
I would be happy to advise you on your individual options with the Supply Chain Act and answer any questions you may have about supply chain processes.
Product Owner Third Party Management and Contact Person Supply Chain Act