Webinar
Webinar Recording: Supply Chain Act Update: Review of the First Year of Implementation and Outlook on the CSDDD
The Supply Chain Due Diligence Act (LKSG) presented German companies with new responsibilities in 2023. The law requires them to ensure human rights and environmental standards in their global supply chains. Starting in 2024, companies with 1,000 or more employees are being brought into compliance. In a webinar, Dr. Martin Rothermel from Taylor Wessing and Robert Kaiser from Tacto provided valuable insight into existing laws and challenges.
Overview of the Supply Chain Due Diligence Act (LKSG)
Since the beginning of 2023, the LKSG applies to German companies with more than 3,000 employees. In 2024, this threshold will be lowered to 1,000 employees. The aim of the law is to prevent human rights violations and environmental damage along the entire supply chain. It forces companies to take responsibility not only for their own activities, but also for those of their direct and indirect suppliers.
Core Elements of LKSG:
- Direct Impact: Companies that exceed the stated thresholds are required to comply with the LKSG.
- Indirect Impact: Smaller companies that act as suppliers can also be indirectly affected. Larger customers increasingly demand compliance from their suppliers. Even companies below the threshold should be aware that they may be asked by larger customers about their human rights and environmental practices.
The Five Pillars of LKSG Compliance
The Supply Chain Due Diligence Act is built on five key pillars that companies must systematically implement to meet legal requirements:
- Risk Analysis: Companies must identify human rights and environmental risks in their supply chain and document these analyses.
- Due Diligence: Based on the identified risks, companies must implement measures to prevent violations. This includes communicating expectations to suppliers and monitoring compliance.
- Grievance Mechanisms: Companies must establish mechanisms through which affected parties can report violations. This creates a feedback loop for continuous improvement.
- Remediation and Corrective Actions: If violations are identified, companies must work with suppliers to rectify them or terminate business relationships if necessary.
- Documentation and Reporting: All measures, findings, and actions must be documented and reported. This creates transparency and demonstrates due diligence efforts.
One of the greatest challenges companies face in implementing the LKSG is maintaining an overview of their supplier base. Traditional spreadsheet solutions quickly reach their limits when it comes to managing hundreds or thousands of suppliers and documenting compliance requirements. This is where a specialized tool like Tacto can provide significant support.
In our webinar "Supply Chain Act Update: Review of the First Year of Implementation and Outlook on the CSDDD," with Dr. Martin Rothermel, attorney at Taylor Wessing, and Robert Kaiser, LKSG expert at Tacto, learn how to efficiently and pragmatically implement the LKSG using a tool.
