Question 1

What does the Supply Chain Act require and what is its purpose?

Accepted Answer

Companies covered by the Supply Chain Act are required to carry out appropriate due diligence throughout their supply chain. To this end, they must establish a due diligence system whose basic structure is based on the core elements of human rights due diligence in the National Action Plan on Business and Human Rights (NAP). According to Section 3 of the Supply Chain Due Diligence Act, the due diligence obligations include in particular:

- Establishing a risk management system
- The definition of internal responsibilities
- Carrying out regular risk analyses (annually and on an ad-hoc basis)
- Implementing preventive measures within the company and with direct suppliers
- Take corrective action
- Establish a complaints procedure
- Implementing due diligence obligations with regard to risks at indirect suppliers
- Documenting and reporting on the effectiveness of all measures taken

Question 2

Who monitors / controls the LkSG?

Accepted Answer

The implementation of the LkSG is monitored by the Federal Office of Economics and Export Control (BAFA). All companies concerned must submit their report at least four months after the end of the financial year. The authority checks the reports and also carries out inspections at the companies. The authority's rights include specifying concrete measures, requesting an implementation plan within three months, summoning and requesting information from persons, entering business premises and inspecting and checking relevant documents and records.

Question 3

What sanctions does the LkSG provide for?

Accepted Answer

The law provides for fines if companies breach certain obligations (intentionally or negligently). These include failing to carry out a risk analysis or doing so incompletely, failing to take corrective action or doing so in a timely manner, or failing to provide documentation. In addition, companies may be excluded from public contracts for up to three years if a fine of a certain minimum amount (threshold depending on the seriousness of the offence) is imposed: EUR 175,000 or EUR 1,500,000, EUR 2,000,000, 0.35% of annual turnover).

Question 4

For whom is the German Due Diligence Act relevant?

Accepted Answer

Since 1 January 2023, the Supply Chain Due Diligence Act (LkSG) sets rules for companies with more than 3,000 employees and at least one location in Germany how to ensure the protection of human rights in global supply chains and to fulfil their due diligence obligations towards their suppliers and business partners. From 01 January 2024, the law will also apply to companies with more than 1000 employees. In the future, EU-wide regulations with further requirements (Corporate Sustainability Due Diligence Directive (CSDD)) will be published.

Question 5

What does the LkSG require from companies?

Accepted Answer

The LkSG aims to address and minimise human rights risks, such as child and forced labour, as well as environmental risks, such as violations of the Minamata Convention. To achieve this, the LkSG obliges companies to conduct a regular risk analysis for their own business and all direct suppliers and a risk analysis for indirect suppliers in case of incidents or suspicions. Furthermore, companies need to set up a risk management system to prevent risks in the supply chain to occur, and if they do, to take preventive and corrective measures. The law requires to introduce a complaints system through which whistleblowers can report human rights violations anonymously or under a pseudonym. All activities must be documented and reported.
If the requirements are not met, companies could face fines of up to 800,000 EUR, companies with a turnover of more than 400 million EUR even 2% of their global turnover. In addition, companies can be excluded from public procurement and suffer severe reputational damage.

Question 6

Will the solution also cover the EU Corporate sustainability due diligence directive (CSDDD)

Accepted Answer

We are monitoring the developments. As soon as the CSDDD is adopted, we will incorporate the requirements into the solution.

Question 7

How does the solution reduce the effort that comes with all the legal requirements?

Accepted Answer

The solution automates as many steps as possible. In addition to the automatic abstract risk analysis, you have the option of having self-assessment questionnaires sent automatically to suppliers via customisable workflows. Other processes such as sending reminder emails or creating and assigning cases to follow-up upon, if risk score requires it, can also be automated.

Question 8

Does the osapiens enables me to be compliant with the law?

Accepted Answer

Yes. All activities that can be carried out with the software are 100% aligned to the legal requirements. We work together with the law firm Graf von Westphalen, which ensures legal compliance.

Question 9

Which options do I have to input my suppliers into the system?

Accepted Answer

Suppliers can be entered manually, uploaded in bulk (e.g. via excel file or transmitted automatically viaRest API / SAP Connector, allowing all ERP Systems to be connected. In the case of integration with SAP, updating of the supplier master data can automated.

Question 10

Can I send questionnaires to my suppliers via the solution?

Accepted Answer

Yes, you can send customized or pre-definded standard questionnaires to your suppliers. The answers are automatically considered in the risk score of your suppliers

Question 11

Do my supplier have to pay something to fill out questionnaires?

Accepted Answer

No, Answering questionnaires is free for suppliers. They can either do it with a log-in, or they can register in the free survey center. Via the survey center, they can save work in progress questionnaires and also save answers for future requests for information.

Question 12

Is the solution suitable for small and medium-sized companies?

Accepted Answer

Yes, the solution is suitable for small to medium-sized companies. There are various templates and training materials that help smaller companies in particular to access and implement the complex topic.

Question 13

What does the implementation process look like?

Accepted Answer

We have a standard implementation workshop series to support an efficient roll. The different workshops require a certain preparation and homework in between. It normally takes about 2-6 weeks.

Question 14

How much does it cost to use the LkSG solution?

Accepted Answer

Our price scheme is based on the number of suppliers you would like to assess in the risk assessment. A price list will be shared upon request.

osapiens HUB for Due Diligence (LkSG)

Meet your due diligence obligations for the supply chain act

Corporate Sustainability across Europe

The German Supply Chain Act (LkSG)

Features of our solution

Risk Analysis & Risk Management

Quickly assess supplier risk with AI

Self-Assessment Forms

Enhance supplier profiles with first-hand information

Supplier Screening

Unlock 360° supplier information

Whistleblower Management

Comply with two laws at once

Preventive & corrective actions

Automate your workflows

Reporting, KPIs & Dashboards

Get tailored information

Technical Integration

Implement supplier data via Plug&Play

Benefits of our solution

End-to-end Compliance

Automated workflows

Structured processes

Quick start

Fits all company sizes

Holistic ESG approach

Become more sustainable, transparent, and efficient with osapiens HUB

Trusted by hundreds of companies from all industries

The osapiens mission

What our customers say

Free LkSG whitepaper

Frequently asked questions