Supply Chain Act: Works councils recognize positive impact of the law
The Supply Chain Due Diligence Act (LkSG), which has been in force since the beginning of 2023 (or 2024 for companies with 1,000 or more employees), obliges large companies to analyze human rights risks in their supply chains and to take preventive measures. A representative survey of works councils shows the extent to which the law has changed practice in companies and how various company groups (management, economic committee, works council, employees) are dealing with the issue.
Important results of the study are:
- Impact and differences between sectors: Around 36% of works councils state that their company is affected by the LkSG. The level of impact increases with the size of the company. Differences between sectors are also evident: Companies in trade, transport, hospitality, construction and business-related services are more likely to be affected than companies in the manufacturing industry.
- Measures in supply chains: Around 43% of works councils report that measures have been implemented in the last two years to review or change supply chains in order to comply with human and employee rights and environmental standards. The most common measures relate to the analysis, monitoring and control of the supply chain, while profound structural changes are less common. It is noteworthy that not all changes were made directly in response to the LkSG.
- Involvement of internal groups: Management is most intensively involved in the issue, followed by economic committees, works councils and the workforce. In companies affected by the LkSG, the issue of working conditions and human rights at suppliers is generally more intensive.
- Information deficits: Two thirds of the works councils surveyed do not feel sufficiently informed about the topic, although the level of information is higher in larger companies. There is therefore a clear need for action, also with regard to training and information offers for the co-determination bodies.
Overall, the article shows that the LkSG and the associated public debate are having an impact, but that there are also gaps in implementation and information. In addition to adapting supply chains, measures are being taken primarily for analysis and monitoring. In order to ensure comprehensive implementation and the active involvement of all company stakeholders, further educational initiatives and sufficient resources for co-determination are necessary.
Please refer: Das Lieferkettengesetz in der Praxis: Einschätzungen durch Betriebsräte