Supply Chain Act: report review by BAFA starting on 1 June 2024
The Supply Chain Due Diligence Act ("Supply Chain Act" or LkSG for short) provides a legal framework aimed at controlling and monitoring the impacts of global supply chains on human rights and the environment.
From 1 January 2023, the State Department will implement the Supply Chain Act, requiring companies to conduct risk assessments, take preventative measures and establish grievance mechanisms to ensure ethical and sustainable standards along their supply chains.
The law will initially apply to companies with at least 3.000 skilled workers domestically, and will also apply to companies with at least 1.000 skilled workers from 2024.
BAFA has already published a digital input mask for companies that are required to report under the LkSG. The reports of all companies are created via this input mask and transmitted to BAFA.
The report under the Supply Chain Act must be submitted to BAFA no later than four months after the end of the respective fiscal year and published on the company website. BAFA verifies the submission of the report and compliance with the legal requirements. The following provisions apply to reports that must be submitted to BAFA between 1 January 2023 and 1 June 2024: the BAFA will not review the submission of reports and their posting on company websites until the deadline of 1 June 2024. However, if companies wish to submit reports before June 1, 2024, the BAFA can provide guidance on how the requirements of the Supply Chain Act should be presented and documented in subsequent reports if requested. This regulation relates exclusively to the reporting obligation. The fulfillment of the other due diligence requirements and their monitoring by BAFA remain unaffected.
The purpose of the reporting obligation is for companies to transparently demonstrate how they implement the substantive due diligence requirements in their corporate practice, particularly in the area of risk management and risk analysis. In addition, companies should describe what concrete measures they take to protect or improve the human rights situation and the environmental situation in their supply chains. The preparation of the legally required reports is thus closely linked to the fulfillment of the substantive obligations of the law.
