Lieferkettensorgfaltspflichtengesetz (LkSG) – German Supply Chain Due Diligence Law
The German Supply Chain Due Diligence aims to ensure the protection of human rights and the environment within corporate supply chains Strating in 2023, the law applies to companies headquartered in Germany with 3,000 or more employees, expanding to companies with 1,000 or more employees from 2024.
Under the LKSG, companies must implement risk management systems to identity, mitigate, and monitor human rights and environmental risks within their supply chains. They are required to conduct regular risk assessments, report to the German government, and address any known violations. Non-compliance can lead to significant penalties, including fines of up to 2% of annual revenue and exclusion from public contracts for up to three years, alongside reputational damage and potential revenue loss.
Free pre-scan LKSG
Fill in the free pre-scan, and you will receive a summary of your scoring, along with a preliminary advice on what to do to fill the gaps in your approach.
How to Comply with the LkSG:
Meeting the requirements of the German Supply Chain Due Diligence Act (LkSG) involves taking key steps to ensure human rights and environmental protection throughout your supply chain.
Here’s what compliance entails:
- Establish a Risk Management System: Set up processes to identify, assess, and manage supply chain risks.
- Define Internal Responsibility: Clearly assign compliance responsibilities within your organization.
- Issue a Policy Statement: Publish a company policy outlining your commitment to due diligence.
- Conduct Regular Risk Assessments: Evaluate risks within your operations and direct suppliers.
- Implement Preventive Measures: Take action to reduce risks in your business and supplier network.
- Take Corrective Actions: Address any identified violations promptly and effectively.
- Set Up a Complaint Procedure: Provide a clear process for reporting and handling grievances.
- Manage Indirect Supplier Risks: Apply due diligence measures when risks involving indirect suppliers are identified.
- Ensure Documentation and Reporting: Maintain transparent records and submit annual compliance reports.
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Navigating the complexities of the LkSG can be challenging, but you don’t have to do it alone. ImpactBuying supports companies in assessing where they stand and identifying gaps in their compliance with the law. Our expert team helps you implement risk management strategies, conduct due diligence, and ensure transparent reporting.
Start with our free pre-scan (in German or English) to receive a personalized compliance overview and actionable recommendations. Together, we’ll build a supply chain that meets legal requirements while promoting sustainability and ethical responsibility.
