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Supply Chain Act Germany

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Supply Chain Act Germany

What’s happening?

The German Supply Chain Due Diligence law (Lieferkettengesetz) has been in force since 2023. It regulates the liability of companies based in Germany for human rights violations in their supply chain.


The currently voluntary recommended practices are then transferred into a legal framework.

On the 11th of June, the German Bundestag officially passed the Lieferkettengesetz, holding companies responsible for human rights violations not only in their own operations but also throughout their supply chain. 

Since 2024, its scope has expanded to include companies based in Germany with over 1000 employees, further strengthening its reach and impact.

What does the Supply Chain Act require?

The law is an important step in implementing the “UN Guiding Principles on Business and Human Rights” decision of the UN from 2011. Its purpose is to combat child labor, exploitation, and slavery, and to anchor more responsibility for the observance of human rights within companies regarding the following issues:

Occupational health and safety

Bodily integrity and health

Environmental protection

Environmentally related obligations to protect human health

Child labor

Protection of children and freedom of child labour

Modern Slavery

Freedom from torture, slavery and forced labour

Labor rights and standards

Collective bargaining rights, fair working conditions (safety at work, breaks)

Occupational health and safety

Bodily integrity and health

Modern Slavery

Freedom from torture, slavery and forced labour

Child labor

Protection of children and freedom of child labour

Environmental protection

Environmentally related obligations to protect human health

Labor rights and standards

Collective bargaining rights, fair working conditions (safety at work, breaks)

The 9 requirements of the German Supply Chain Due Diligence Act (LkSG)

Requirement (§ of the LkSG) Tool support Potential for automation Prewave Functionality and Support
9Conduct frequent risk analysis (§ 5) Automated with AI analysis Automated Red Flag Screenings and 360° Scoring for all suppliers
8Set preemptive measures within your own company and at your direct suppliers (§ 6.4) Automated with Al-based analysis Supplier Monitoring Initial Screenings for new suppliers
7Taking action on cases (§ 7 Abs 1-3) Automatic prioritisation and 7 supplier communication within the tool Watchlist & Case Management,
Automated Supplier Statements
6Implementation of the requirements at direct suppliers (§ 9) Automated via Al based analysis and Tier-N Monitoring Tier-N Mapping & Monitoring
Commodity Monitoring
5Documentation and reporting (§ 10 Abs 1-2) Supported in the tool Reporting (XLS, PDF).
Analysis dashboard
4Implementation of grievance mechanisms (§ 8) Collection, prioritisation and handling in the tool Grievance mechanism
3Code of Conduct and Policy Statement (§ 6 Abs 2) Internal/ Organisational Consulting support
2Appointing internal responsibilities (§ 4 Abs 3) Internal/ Organisational Consulting support
1Implementing a risk management system (§ 4 Abs. 1) Internal/ Organisational Consulting support: Best practice and Risk prioritization and processes

High Complexity

Tool-support and Automation necessary

Medium Complexity

Low Complexity

Base

In essence a functioning risk management system in the supply chain is needed to comply with the corporate due diligence law. Bad business practices along the supply chain have to be prevented. These included but are not limited to environmental damages, exploitations and unfair business practices. Special care needs to be taken with raw materials, determining their sustainability and making sure there are no conflict minerals involved in the supply chain. Last but not least all service providers and logistics partners in the supply chain also need to be monitored and evaluated to prevent sustainability risks from these external factors.

High Complexity

Tool-support and
Automation necessary

Requirement (§ of the LkSG) Tool support Potential for automation Prewave Functionality and Support
9Conduct frequent risk analysis (§ 5) Automated with AI analysis Automated Red Flag Screenings and 360° Scoring for all suppliers
8Set preemptive measures within you own company and at your direct suppliers (§ 6.4) Automated with Al-based analysis Supplier Monitoring Initial Screenings for new suppliers
7Taking action on cases (§ 7 Abs 1-3) Automatic prioritisation and 7 supplier communication within the tool Watchlist & Case Management,
Automated Supplier Statements

Medium Complexity

Requirement (§ of the LkSG) Tool support Potential for automation Prewave Functionality and Support
6Implementation of the requirements at direct suppliers (§ 9) Automated vis Al based analysis and Tier-N Monitoring Tier-N Mapping & Monitoring
Commodity Monitoring
5Documentation and reporting (§ 10 Abs 1-2) Supported in the tool Reporting (XLS, PDF).
Analysis dashboard
4Implementation of grievance mechanisms (§ 8) Collection, prioritisation and handling in the tool Grievance mechanism

Low Complexity

Base

Requirement (§ of the LkSG) Tool support Potential for automation Prewave Functionality and Support
3Code of Conduct and Policy Statement (§ 6 Abs 2) Internal/ Organisational Consulting support
2Appointing internal responsibilities (§ 4 Abs 3) Internal/ Organisational Consulting support
1Implementing a risk management system (§ 4 Abs. 1) Internal/ Organisational Consulting support: Best practice and Risk prioritization and processes

High Complexity

Tool-support and
Automation necessary

Requirement (§ of the LkSG) Tool support Potential for automation Prewave Functionality and Support
9Conduct frequent risk analysis (§ 5) Automated with AI analysis Automated Red Flag Screenings and 360° Scoring for all suppliers
8Set preemptive measures within you own company and at your direct suppliers (§ 6.4) Automated with Al-based analysis Supplier Monitoring Initial Screenings for new suppliers
7Taking action on cases (§ 7 Abs 1-3) Automatic prioritisation and 7 supplier communication within the tool Watchlist & Case Management,
Automated Supplier Statements

Medium Complexity

Requirement (§ of the LkSG) Tool support Potential for automation Prewave Functionality and Support
6Implementation of the requirements at direct suppliers (§ 9) Automated vis Al based analysis and Tier-N Monitoring Tier-N Mapping & Monitoring
Commodity Monitoring
5Documentation and reporting (§ 10 Abs 1-2) Supported in the tool Reporting (XLS, PDF).
Analysis dashboard
4Implementation of grievance mechanisms (§ 8) Collection, prioritisation and handling in the tool Grievance mechanism

Low Complexity

Base

Requirement (§ of the LkSG) Tool support Potential for automation Prewave Functionality and Support
3Code of Conduct and Policy Statement (§ 6 Abs 2) Internal/ Organisational Consulting support
2Appointing internal responsibilities (§ 4 Abs 3) Internal/ Organisational Consulting support
1Implementing a risk management system (§ 4 Abs. 1) Internal/ Organisational Consulting support: Best practice and Risk prioritization and processes
Quickcheck

Am I impacted by the Germany Supply Chain Act?

Yes, I have to act now. The law has been in effect for me since 2023.

Yes, I have to act now. The law has been in effect for me since 2024.

The law doesn’t affect me directly, but it can still be a great time to rethink supply chain sustainability.

Do you have to act now?

Find out everything you need to know in our Supply Chain Act Whitepaper and Checklist

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