On this page, you will find information on the collaboration in the supply chain between obliged companies and their suppliers.
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The Supply Chain Due Diligence Act (LkSG) obliges companies of a certain size (since 2023 with at least 3,000 employees in Germany, from 2024 with at least 1,000 employees in Germany) to respect certain human rights and environmental due diligence obligations in their supply chains (= obliged companies). The Act has effects on companies outside the scope which are in direct or indirect supplier relationship. This is because the Supply Chain Due Diligence Act requires obliged enterprises to collaborate with their suppliers in order to fulfil their due diligence obligations even if these suppliers do not have their own obligations according to the Supply Chain Due Diligence Act.
The transfer of obligations under the Act to suppliers is not permitted. Companies that fall under the scope of the Act are responsible to comply with their due diligence obligations. Even where the Act requires obliged companies to collaborate with non-obliged companies, the Act only defines requirements regarding the actions of obliged companies. The principles of appropriateness and effectiveness prescribe a risk-based approach and at the same time limit the transfer of due diligence obligations to suppliers.
Fulfilling due diligence obligations is a learning process for everyone involved, and collaboration in the supply chain should be understood as a dynamic process based on dialogue and continuous exchange. Ideally, obliged companies work with their suppliers fairly and on an equal footing over a longer period of time. Sector initiatives can also support this.
Obliged companies should proceed on a risk-based approach and check which information they actually need from their suppliers to carry out an appropriate risk analysis and which information they do not need. Before obliged companies ask their suppliers to sign a code of conduct or contract adjustments, the obliged company should carefully check on what basis it is required, whether the agreement is effective and balanced in terms of the risk-based approach and whether it can actually be implemented.
More detailed information with practical examples and further recommendations can be found in the Guidance "Cooperation in the supply chain between obligated companies and their suppliers", which was jointly published by BAFA and the German Helpdesk on Business & Human Rights. The Guidance also demonstrates where cooperation is required by law and what obliged companies can and cannot ask from their suppliers to do under the LkSG. The "Most Important Questions and Answers for SMEs" and the "Executive Summary of the Guidance" provide SMEs with helpful information in the event that they come into contact with the requirements of the law. In point 17 of the "Questions and answers on the Supply Chain Act" you will also find information on the effects of the LkSG on SMEs and information on support offers.
