Simply put: what is Germany’s Act on Corporate Due Diligence Obligations in Supply Chains?
Companies in Germany are responsible for ensuring that their suppliers respect human rights and environmental protection law. Germany’s Act on Corporate Due Diligence Obligations in Supply Chains (LkSG) governs exactly how this should be done. However, these obligations do not yet apply to all companies. Since January 1, 2023, companies with at least 3,000 employees in Germany must implement the provisions of the LkSG; from January 1, 2024, this requirement will also apply to companies with more than 1,000 employees. GETEC will already satisfy the requirements of the LkSG this year, although it is not legally obliged to do so until 2024.
What challenges will the LkSG create for GETEC?
For all companies, including us, the LkSG is associated with substantial effort such as the obligation to report the measures taken to comply with the due diligence requirements. This requires a rapid change of perspective by employees and the expansion of our risk management system. Added to this is the need to define responsibilities within and outside the company and for further training and intensive internal communication. Valid data must be recorded for the mandatory risk assessment. This is also complex, especially for companies with international operations. All of these time-consuming and not always self-explanatory activities are resulting in significant stress for us and probably also for most other German companies.
How is GETEC actually implementing these measures?
We began the design phase at the start of the year and developed a detailed concept. The resulting responsibilities are now anchored within the organization. The LkSG compliance process is covered by a new procurement policy that has been published and communicated. However, process digitalization is the key to effectiveness. We have found good solutions for this as well.
Which digital tools are you using to implement the processes?
With the aid of our new supplier portal, we perform a continuous risk assessment of our largest and most important suppliers. The same tool is used to document the measures (remedial and preventive measures) and for reporting. We have already concluded the risk assessments for the first 500 suppliers.
In addition, we will be replacing our current “SpeakUp” whistleblowing system with a new software solution that meets the Group’s current requirements. The new software allows both external and internal whistleblowers to submit anonymous reports of human rights violations in their own business areas or by indirect and direct suppliers.
The third tool is the process mining software that is used to visualize the results of all supplier risk assessments by all members of our Procurement team. In this way, the results can be incorporated into every procurement process and observed.