Supply chain law for SMEs: mastering indirect impact

The Supply Chain Due Diligence Act (LkSG) obliges companies above a certain size (since 2023 with at least 3,000 employees in Germany, from 2024 with at least 1,000 employees in Germany) to comply with certain human rights and environmental due diligence obligations in their supply chains (= obligated companies). The law also has an impact on companies that do not fall within the scope of the LkSG but have a direct or indirect supplier relationship with an obligated company. This is because the LkSG stipulates that obligated companies must cooperate with suppliers in order to fulfill their due diligence obligations.

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In many cases, obligated companies will need to work with their suppliers in order to fulfill their own statutory due diligence obligations. This is also provided for in the law and begins with the establishment of a risk management system. Obligated companies also need support from suppliers with regard to risk analysis, preventive and remedial measures and the complaints procedure.

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If you would like detailed information on the requirements for indirectly affected companies, download our white paper"Supply Chain Act for SMEs: Mastering indirect effects" now.

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