Supply Chain Act (LkSG)
Erweiterung der Menschenrechte & Umweltschutzauflagen
- Valid from 2024 for companies with 1000 employees
- Suppliers & SMEs de facto affected
- Entire supply chains must become sustainable
The Supply Chain Act or, more precisely, the German Supply Chain Due Diligence Act (LkSG) does not contain direct regulations on energy law. Nevertheless, it does, among other things decisive influence on the energy industry of a large company and its entire supply chain. De facto, therefore also SMEs affected by the LkSG because they are (directly) Suppliers and are therefore contractually required by their customers to comply with due diligence obligations. By 2027 at the latest, all EU member states will also have their own supply chain laws based on the CSDDD-directive. In the process, the German LkSG will also be further developed so that it affects many companies.
Objectives of the Supply Chain Act
It obliges affected companies to comply with human rights and environmental due diligence obligations along their supply chains. They must assume their responsibility and not only must they not tolerate human rights violations such as forced labor, child labor, discrimination or violations of labor rights in their supply chains, but must also Environmental damage and Reducing environmental pollution. To this end, the LkSG instructs companies to take all measures to minimize environmental impacts such as CO₂ emissions, Waste of energydeforestation or water pollution along the entire value chain. In this way, their responsibility is to be strengthened and companies are encouraged to implement more sustainable practices. This includes, for example, introducing due diligence procedures to check suppliers and their practices, setting up complaints mechanisms for those affected and complying with transparent reporting obligations.
Supply Chain Act: What will change in 2024?
The Supply Chain Act was passed by the German Bundestag on June 11, 2021, has been in force since January 1, 2023 and initially applies to all companies with more than 3,000 employees in Germany. From January 1, 2024, the threshold of Employees reduced to 1,000This means that far more companies and their suppliers will be affected. In the event of violations of the Supply Chain Act fines may be imposed. In addition, companies that do not comply with their due diligence obligations can be penalized by public contracts excluded become.
The Supply Chain Act is an important step towards promoting corporate responsibility and protecting human rights and the environment in global supply chains. It also sends a signal to other countries that are considering similar laws.