Supply Chain Act in medium-sized industrial companies: what do medium-sized businesses need to bear in mind?

Supply Chain Act in medium-sized industrial companies: What do medium-sized businesses have to consider?

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Since January 2023, the Supply Chain Due Diligence Act (LkSG) has applied to companies in Germany with 3,000 or more employees. From 2024, it will then also be mandatory for companies with 1,000 or more employees to comply with their due diligence obligations along the supply chain. However, not only companies that fall within the scope of the Supply Chain Act are affected, but also indirectly affected companies, such as suppliers of any size of the directly affected companies. Indirectly affected companies must therefore also ensure that their own supply chains are free of human rights violations and environmental problems.

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But what does that look like in practice?

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As a supplier of a directly affected company, you are indirectly affected by the Supply Chain Act. For example, if there is a risk of child labor in your production chain, the directly affected company must take measures to remedy this and terminate the business relationship with you as a supplier. In order to be able to maintain your business relationships, you as an indirectly affected company must therefore also ensure that a risk analysis is carried out along your supply chain in order to be able to initiate measures against activities that violate the law.

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Industrial medium-sized companies in particular are faced with a high level of bureaucracy as a result of supply chain networking and structures. Particularly in view of the tightening of the law by the EU, which is expected to apply to companies with 250 or more employees, it is important to prepare for the requirements of the Supply Chain Act at an early stage.

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Would you like to receive more information?

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Learn now in our Whitepaper which obligations the Supply Chain Act as well as the European Directive contain, whether you are affected by them and how you can easily and intuitively control the Supply Chain Act within your supply chain and comply with the minimum requirements with the help of Tacto.

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In addition, the Federal Office of Economics and Export Control (BAFA) has published various handouts, such as on the adequacy of the Supply Chain Act or on risk analysis, which summarizes the key requirements of the law and shows practical implementation options.

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