Home New Guidance for German Supply Chain Act
In August, Germany’s Federal Office for Economic Affairs and Export Control (BAFA) issued guidance on the Supply Chain Due Diligence Act (LkSG). The LkSG requires German companies to carry out human rights and environment-related due diligence on themselves and their suppliers. When it comes into force on Jan. 1, 2023, the act will apply to enterprises with at least 3,000 employees. As of Jan. 1, 2024, this will drop to 1,000 and starting from then some companies in the broader lubricants space will also join the game.
Under the act, companies must ensure that it identifies, prevents, stops or at least mitigates risk. This applies to both their own business and their suppliers. As for money laundering or anti-corruption, companies must establish a risk management system that forms the organizational and procedural framework for fulfilling other due diligence obligations. BAFA will monitor and enforce due diligence obligations and may impose penalties and fines for breaching obligations. BAFA will also assist companies by publishing handouts that provide information, assistance and recommendations on compliance with the LkSG.
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