Worldwide Supply Chain Acts
Below, you will find an overview of worldwide supply chain laws, their thresholds, deliverables and sanctions for violations:
German Supply Chain Due Diligence Act (LkSG)
What is the LkSG?
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The Supply Chain Due Diligence Act (LkSG) is the German supply chain law. The German federal law governs the economic activities of companies based in the Federal Republic of Germany by imposing human rights due diligence obligations on them, which they must observe within their supply chains.
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It was adopted by the Bundestag on 11 June 2021 as Article 1 of the Act on Corporate Due Diligence Obligations in Supply Chains. The subsequently required publication in the Bundesgesetzblatt (Federal Law Gazette) took place on 22 July 2021 so that the law could enter into force on 1 January 2023. You can find the full law text here.
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To whom does the LkSG apply?
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Since 2024, the LkSG applies to German companies with more than 1,000 employees. Affected are direct and indirect customers and suppliers.
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What are the sanctions for companies that do not (correctly) implement the LkSG?
Sanctions are up to EUR 8 million and exclusion from tenders.​
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How do companies implement the LkSG?
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Deliverables are: a self disclosure, risk analysis, risk management, grievance mechanism, public reporting. Please see the fundamental tasks and the process tasks for compliance below.
Fundamental tasks for compliance with the German Supply Chain Act
Human rights violations like child labour, modern slavery and environmental damage occur in many high-risk industries and high-risk countries on a daily basis in global supply chains. Hence, many global governments published laws to protect vulnerable people and contain the pressing global issue.
Companies shall be included in the obligation to source and produce more responsibly. They need to make their supply chain transparent so that risks and violations become visible and can be fixed.
bizpando is the platform that helps companies to implement the following requirements.
The due diligence measures required by the German Supply Chain Act are composed of three initial tasks to build the fundament and six provisions for the ongoing risks and complaints process.
Place responsibility on someone in-house
A person within the company needs to be
assigned to be responsible for the risk management. Such a person should have a good understanding
and a transparent view on the company's global overall supply chain.
Introduce a complaints procedure
The company has to ensure that a complaints
procedure is in place. It enables persons to
point out human rights and environmental
risks and violations that have arisen as a
result of the economic activities of a
company in its own business operations or
those of a direct or indirect supplier.
Establish a
risk management system
Measures have to come into effect to minimize the risk of violations and to stop their occurences in the case of the company having caused or contributed to them within the supply chain. Such measures are
managed through a risk management
system.
Identify
risks &
complaints
The company has to identify the human rights and environmental risks and complaints in its own business area as well as those of its suppliers.
Analyze
risks &
complaints
The company has to analyze, priories and weigh up the identified risks and complaints and then communicate the results internally to the decision makers.
Create
reports
The company shall prepare a report on the fulfilment of its due diligence obligations in the previous financial year and make it publicly available free of charge.
The company has to take action for analyzed risks by issuing a policy statement on its human rights strategy and by implementing preventive measures in its own business and with its suppliers.
Take
preventive
action
Take
corrective
action
The company has to take corrective actions for existing violations reported through the complaint’s procedure and other information sources.
Write
documentation
The company has to document the fulfilment of due diligence obligations on all process steps and store documentation for at least seven years.
Process tasks for compliance with the German supply chain law
EU Supply Chain Directive (CSDDD)
What is the European Supply Chain Law?
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The Corporate Sustainability Due Diligence Directive (CSDDD or CS3D in short) is a European directive that was published in the Official Journal of the EU on 5 July 2024. You can find the entire CSDDD text here. ​
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To whom does the CSDDD apply?
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By 26 July 2026, EU member states such as Germany must transpose the CSDDD into their respective national laws.
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Exactly when and for which companies it applies depends on their number of employees and net turnover:
2027: 5000+ employees and more than EUR 1,500 million turnover
2028: 3000+ employees and more than EUR 900 million turnover
2029: 1000+ employees and more than EUR 450 million turnover
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What are the sanctions for companies that do not (correctly) implement the CSDDD?
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Violations are penalised with fines of at least 5% of global net sales.
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How do companies implement the CSDDD?
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The CSDDD requires EU and non-EU companies that fall within the scope of the Directive to carry out human rights and environmental due diligence in their operations, subsidiaries and value chains. Businesses must prevent, identify, mitigate and account for negative impacts on human rights and the environment. Companies that fall within the scope must ensure that their business strategies are compatible with limiting global warming to 1.5°C.​
What do the German and EU Supply Chain Acts have in common?
Whether LkSG or CSDDD - with bizpando you can ensure supply chain transparency with just a few clicks and easily implement upcoming EU-wide regulations.
German Whistleblower Protection Act (HinSchG)
What is the Whistleblower Protection Act?
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The Whistleblower Protection Act (in German "Hinweisgeberschutzgesetz", or "HinSchG") is based on the EU Whistleblower Protection Directive of 2019. Its goal is to enable whistleblowers to report legal violations as safely as possible. You can find the full law text here.
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To whom does the Whistleblower Act apply?
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As a first step in 2023, the law applied to companies located in Europe with more than 250 employees. Since 2024, its scope widened and now it applies to European companies with more than 50 employees.
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What are the sanctions for companies that do not (correctly) implement the HinSchG?
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Sanctions are up to EUR 1 million.
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What are the first steps a company (especially an SME) should take to harmonise its practices with the HinSchG?
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Solid information about the respective requirements
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Selection of a good system
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Interdisciplinary project team
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Reaching the target group: technically and linguistically
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Knowing the formal requirements and implementing them with the target group in mind
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Not only process messages, but also communicate them
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What do the HinSchG and the LkSG have in common?
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Appropriate complaints procedures are a core element of the due diligence obligations established by the LkSG. According to Sections 8 and 9 of the Act, every company must have a grievance procedure in place through which internal and external persons can inform 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, participate in an equivalent external procedure or combine internal and external complaints procedures.
While developing the bizpando platform, we put great importance on two aspects from the very beginning:
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First, the whistleblowing solution must be usable for both large corporations and small businesses.
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Secondly, anonymity and an anonymous exchange of questions and information must be possible throughout the entire processing time.
We have implemented both in the whistleblower function "whistlehorn", which is an add-on of the bizpando platform. A company can either process the whistleblowing itself or commission a service provider to do so.
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How can SMEs ensure that they comply with the LkSG and the HinSchG without overstretching their resources?
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A digital system like bizpando that fulfils both requirements
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Train authorised persons and relevant employees before implementation, ensures efficiency during implementation
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Set limits, what can the organisation achieve - where is external support needed?
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Start implementation in good time, avoid time pressure
EU Deforestation Regulation (EUDR)
What is the EUDR?
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The EI Deforestation Regulation (EUDR) is a key component in the fight against climate change and the decline in biodiversity. Affected companies in the EU have until 30 December 2024 to adapt to the regulations. You can find the full law text here.
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Which companies and products or raw materials are affected by the EUDR?
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The EUDR distinguishes between three types of affectedness:
Product Affectedness: Raw materials or products: Cattle, cocoa, coffee, oil palm, rubber, soya and wood
Activity: Operators: Persons or companies placing products on the EU market for the first time. Traders: Persons or companies that resell products but are not market participants.
Company size: Large companies: Must comply with EUDR from 30/12/2024. SMEs: Must comply with EUDR from 30/06/2025.
The regulation aims to control the trade, import and export of raw materials and products containing or made from cattle, cocoa, coffee, oil palm, rubber, soya and wood, insofar as they are imported into or exported from the EU. The raw materials and products may only be placed on the European market or exported to other international markets if they fulfil the conditions stipulated by the EU, if they are deforestation-free, have been produced in accordance with the laws of the country of origin and a due diligence declaration is available.
The list of products can be found in ANNEX I of the EUDR.
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What are the sanctions for companies that do not (correctly) implement the EUDR?
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Violations of the EUDR can result in massive sanctions, including fines of up to 4 per cent of annual turnover.​
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What are the first steps for companies to implement the EUDR?
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Here is a checklist for companies to implement the EUDR:
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Check whether your company is affected
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Build up knowledge of EUDR
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Define clear responsibilities
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Implement a compliance system with risk management
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Ensure compliance within the supply chain
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Create safeguarding plans for preventive and remedial measures
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How can companies deal with the challenges of the EUDR?
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Implementation of compliance systems
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Partnerships with experts: As a platform for compliance with global supply chain laws, we are already in talks with specialised partners to efficiently implement the EUDR for companies in accordance with our standards.
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Creating transparency in the supply chain
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Carrying out audits
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Use technological solutions
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Integration of compliance obligations in contractual agreements
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​​​What is deforestation?
"Deforestation" means the conversion of forests into agricultural land, whether or not caused by human activity.
"Forest": areas of more than 0.5 hectares with trees over 5 metres high and a canopy cover of more than 10% or with trees that can reach these values on the respective site, excluding areas that are predominantly used for agricultural or urban purposes; - no parks, no agroforestry plantations, no savannahs (scrubland).
"Deforestation-free" in the EUDR means that the products or raw materials may only come from areas that have not been deforested for agricultural use after December 31st, 2020.
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Full law texts of selected Supply Chain and Whistleblowing Acts
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