On this page, you will find information on the principle of appropriateness and the principle of effectiveness as set out by the Act on Corporate Due Diligence Obligations in Supply Chains (Lieferkettensorgfaltspflichtengesetz, or LkSG).
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The principle of appropriateness and the linked requirement of appropriate implementation of due diligence obligations is a core principle of the German Supply Chain Act.
Through the principle of appropriateness, enterprises have the necessary discretionary power and scope of action for the implementation of their due diligence obligations, for example with regard to the selection and design of measures or the expenditure of resources.
In this regard, enterprises are not expected to do anything unreasonable. The intensity of their efforts may vary depending on the type and size of their business, the enterprise's ability to exert influence, the severity and likelihood of occurrence of violations, and the type of causation contribution.
The principle of effectiveness derives from the fundamental objective of the LkSG to improve the human rights situation at international level.
Effective measures make it possible to identify human rights and environmental risks and to prevent and stop violations of human rights or environment related obligations or minimize their extent.
Risks and violations must be effectively addressed by enterprises. An enterprise is required to regularly review whether its own actions are in fact achieving the intended effects and to make adjustments where needed. Accordingly, an enterprise's overall risk management, risk analyses and complaints procedures must also fulfill the requirement of effectiveness.
Enterprises that comply with their due diligence obligations therefore focus on the interests of their own employees, those within the supply chain, and those who may otherwise be affected by the business activities of the enterprise or an enterprise in its supply chains.
The LkSG provides clear guidance on the criteria that are relevant for determining appropriateness: the type and size of the business, the enterprise's ability to exert influence, the severity and likelihood of occurrence of risks and violations, and the type of causation contribution.
Accordingly, these criteria must be considered in the following measures: the design and review of the risk management, the identification, weighting and prioritization of risks, the identification of violations, the development and the implementation of preventive and remedial actions, as well as the establishment of an appropriate complaints procedure.
