The German Due Diligence Act (LkSG) has now been in force for almost a year. This means that all companies with 3,000 or more employees must, among other things, adopt a policy statement, analyze the risks among direct suppliers and, if necessary, take corrective measures if risks are identified. From January 1, 2024, the LkSG even applies to companies with 1,000 employees.
The Federal Office of Economics and Export Control (BAFA) is responsible for monitoring the implementation of the LkSG. This can even impose sanctions on companies for violations of the LkSG. In the first year, however, BAFA has not yet imposed any sanctions on companies. This is quite deliberate, because – as Torsten Safarik, head of BAFA, explains: “We see ourselves as partners of companies in order to successfully implement the law together,” as can be seen in an article in the Tagesschau.
There is also criticism of this approach because it means that changes are achieved less quickly than human rights violations in supply chains might require. The criticism is certainly justified. However, as always, it is important to find the balance between reality and expectations. The new EU supply chain directive with civil liability and applicability to companies with 500 or more employees will certainly increase the pressure on everyone involved.