The BAFA handouts on the Supply Chain Act in brief
published on
11.11.2024
The Supply Chain Act has been in force since January 1, 2023. Initially, there were still many unanswered questions about the concrete implementation of the requirements. Now the BAFA (Federal Office of Economics and Export Control) is increasingly providing concrete specifications and assistance in the form of handouts. Published so far are the handouts on risk analysis, the complaints procedure and the principle of appropriateness and effectiveness. These are intended to help companies transform the abstract legal text into clear implementation measures by providing guidance.
The principle of adequacy sets the overarching framework for the implementation of the due diligence obligations established by the Supply Chain Due Diligence Act (LkSG). Companies are therefore required to establish, monitor and further develop appropriate and effective processes for implementing their due diligence obligations. The principle of effectiveness, on the other hand, serves the fundamental objective of the law to improve individual human rights protection, the international human rights situation and the protection of the environment. The principles of adequacy and effectiveness are closely related, as only from effective measures can an appropriate choice be made. By reviewing effectiveness and appropriateness, companies can use their resources in a more targeted manner.
Under Section 4, the Supply Chain Act requires companies to establish appropriate and effective risk management to identify, prevent, minimize or end human rights or environmental risks or violations. In doing so, companies should follow a risk-based approach. This means they should target their resources and address the most important and urgent issues first. It is a fundamental building block of a company's own risk management and helps companies use their resources as wisely as possible.
Appropriate complaints procedures are a core element of the due diligence obligations established via the Supply Chain Act. According to Sections 8 and 9 of the Act, every company must have a complaints procedure through which internal and external persons can notify the company of human rights or environmental risks or violations in its own business operations and in the supply chain. Companies can use an internal company procedure for this purpose, participate in an equivalent external procedure, or combine internal and external complaints procedures.
The BAFA handouts offer companies, especially SMEs, valuable guidance on how to efficiently implement the requirements of the LkSG. With the practical guidelines on appropriateness, risk analysis and the complaints procedure, companies can better comply with the legal requirements and at the same time make their supply chains sustainable.
For detailed information on the implementation of the LkSG and how to use the BAFA handouts, download our whitepaper "The BAFA handouts on the Supply Chain Act in brief".
.png)
