The Supply Chain Due Diligence Act (LkSG) came into force almost a year ago, on January 1, 2023. It is intended to guarantee that companies in Germany do not benefit from child labor, forced labor and other abuses at their suppliers. According to its own information, the responsible Federal Office for Economic Affairs and Export Control (BAFA) has not had to impose any sanctions for violations in the first year and has drawn a positive overall balance, which is also followed by civil society networks such as the Supply Chain Act Initiative, the Campaign for Clean Clothing and the CorA network connect. However, there is room for improvement.
According to Bafa, there have been 486 inspections of companies since the law came into force – mostly in the automotive, chemical, pharmaceutical, mechanical engineering, energy, furniture, textile and food and beverage industries. 38 complaints were received and in six cases the office contacted the companies. “The obligated companies are taking a closer look at their supply chains and are largely successfully implementing the requirements of the law. “They approached their suppliers in order to eliminate or mitigate grievances,” Bafa concluded.
Make complaints procedures known
“The German supply chain law brings with it important levers for change,” says Artemisa Ljarja, casework coordinator for the Clean Clothing Campaign, commenting on the experiences from the textile sector. “Companies are now obliged to set up complaint mechanisms themselves and to respond to reports received from those affected. This strengthens the position of those affected, NGOs and unions in dialogue with companies. “It’s crucial that companies really communicate their grievance procedures to workers in the supply chain and build accessibility and trust in their use,” she advises.
Overall, the civil society networks mentioned agree that companies have intensified their human rights risk management and those affected, human rights organizations and trade unions are beginning to use the complaint mechanism.
Share due diligence along the supply chain
“The first year of the Supply Chain Act has shown that it works: Organizations from our network, together with those affected, submitted initial complaints to the control authority, but companies are also clearly showing that they are working on their supply chains and paying more attention to the issue,” confirms Heike Drillisch , Coordinator of the CorA Network for Corporate Responsibility, in a joint statement.
She emphasizes Bafa’s responsibility: “It is crucial that Bafa addresses the concerns of smaller companies and has made it clear: the due diligence obligations must not be passed on to suppliers or outsourced. Instead, companies must address the risks in partnership and adapt their own business and procurement practices.”
Reporting requirements are central
Drillisch rejects the suspension of reporting obligations recently called for by Economics Minister Robert Habeck: “The reports on risk management and measures taken are not useless bureaucracy, but are essential to checking whether companies are adequately complying with their duty of care. Weakening it would be both counterproductive for the protection of those affected and a disdain for all companies that have already taken action under the LkSG.”
From 2024, additional companies will be covered by the LkSG, while at the same time a European regulation is nearing completion. “The weaknesses in the German supply chain law must and can be compensated for. The EU Supply Chain Act will add important civil law options for those affected. The federal government and German members of the European Parliament must now make their contribution to a quick final decision on the directive in the EU Council and Parliament,” explains Michelle Trimborn, spokeswoman for the Supply Chain Act Initiative.