How GEP Can Help Ensure Compliance With the New German Supply Chain Due Diligence Act (Lieferkettengesetz)

The new German Supply Chain Act (LkSG), which came into effect in January 2023, is a significant development in Germany’s efforts to promote corporate social responsibility and prevent human rights violations in the supply chain.

While the law currently only applies to companies with more than 3,000 employees, from 2024 it will also affect companies with more than 1,000 employees.

Violations of the LkSG may result in penalties of up to €800,000 or 2% of the company’s annual global turnover, and exclusion from German business contracts for three years. This legislation is part of a broader trend across Europe towards corporate responsibility in preventing human rights violations.

However, only about 4% of German companies are prepared to implement the LkSG and 70% are moderately to very poorly prepared, according to a survey by the Federal Association of Materials Management, Purchasing and Logistics (BME) and Integrity Next.

This data highlights the need for businesses to take immediate action to assess their supply chains and implement measures to ensure compliance with LkSG requirements.

With the upcoming expansion of the LkSG's scope, it is crucial for businesses to act and prepare for compliance.

How GEP Can Help with LkSG Compliance

At GEP, we offer a comprehensive solution that combines consulting services and technology to help businesses achieve compliance with the new German Supply Chain Act. Our services include:

• Initial assessment to determine the extent to which your business meets the requirements of the new German Supply Chain Act, identify priority areas and develop a tailored plan for achieving compliance
• Design and implementation of policies and procedures to manage and mitigate risks in your supply chain
• Supplier due diligence and establishment of data collection, tracking and monitoring mechanisms and processes for ongoing risk-mapping
• Definition and establishment of roles and responsibilities and governance mechanisms
• Development and implementation of reporting and disclosure frameworks that comply with the new reporting requirements
• Digitization of supplier risk-management throughout procurement processes, including automated risk assessments and customizable reporting capabilities
• Dashboarding that provides view of risk and related metrics across supplier base and spend, as well as status of risk management activities

GEP’s approach is tailored to your specific needs and priorities, and we work closely with you to ensure that our solutions are aligned with your business objectives.

By choosing GEP as your partner for ensuring LkSG compliance, you can benefit from our proven track record, deep supply chain and DACH region expertise, global network of experts and partners and our focus on delivering sustainable and responsible solutions for our clients.

Contact us today to find out more about our services and how we can help you become compliant with the new German Supply Chain Act.