Supply Chain Act
Industry leading companies work with IntegrityNext
The Supply Chain Due Diligence Act (LkSG) has been in force in Germany since January 1, 2023. It aims to provide greater protection for human rights and the environment in the global economy. Affected companies must check suppliers for compliance with human rights and environmental standards. This creates new due diligence and reporting obligations for companies.
IntegrityNext offers a comprehensive risk management system that is aligned with the guidelines of the Federal Office for Economic Affairs and Export Control (BAFA) to comply with the new requirements. Conduct abstract and concrete risk analyses, implement preventive and corrective measures, and easily document and report on your due diligence efforts. IntegrityNext helps you implement the Supply Chain Act with confidence and efficiency.
Supply Chain Act
Implement the LkSG
safely with IntegrityNext
IntegrityNext helps you meet the requirements of the Supply Chain Act with minimal effort, reduce associated risks and improve the sustainability of your supply chain.
The IntegrityNext platform covers the key due diligence and reporting duties of the LkSG and supports a fast and efficient implementation of the new requirements in your company:
Establishing a risk management system
Performing regular risk analyses
Laying down preventive measures
Taking remedial action
Implementing due diligence obligations at indirect suppliers
Documentation and reporting
Issuing a policy statement
Designating a responsible person(s) within the enterprise
Establishing a complaints procedure
Confirmed by a legal opinion
The German Supply Chain Act: Scope, Requirements
and Implementation with IntegrityNext
Download our White Paper for more information on the Supply Chain Act, its requirements and how to implement them using the IntegrityNext solution.
LkSG Risk Management
IntegrityNext has developed a field-tested process, which supports you step by step with the establishment of a continuous and effective risk management in line with BAFA guidelines:
From the field:
How DMG MORI implements the Supply Chain Act
"Over the past twelve months, we have been able to establish a holistic risk management process that enables us to meet the new legal requirements."
The Bielefeld-based machine tool manufacturer DMG MORI has been using the IntegrityNext platform to monitor sustainability and compliance along the supply chain since 2019, initially focussing on A and B suppliers. In anticipation of the German Supply Chain Act (LkSG), the company has since onboarded all its suppliers to the platform and used the IntegrityNext solution to create a risk management system that meets the requirements of the LkSG.
How IntegrityNext helps
The platform first supported an abstract risk analysis of the entire supplier base which determined which suppliers had to be examined more closely: 631 were invited to complete the IntegrityNext self-assessments. The remaining low-risk suppliers are continuously monitored via the Critical News Monitoring. DMG MORI can react immediately to potential risks via the platform and initiate appropriate measures. Additionally, IntegrityNext supports the documentation and reporting in line with the LkSG.
Is your company
The applicability of the LkSG depends on the number of employees. Since January 2023, it applies to German companies with more than 3,000 employees, and from January 2024 the scope will be extended to companies with more than 1,000 employees.
Foreign companies that have a branch office in Germany and employ the respective number of employees in this office are also affected.
The core element of the LkSG:
The risk analysis
The central task under the Supply Chain Act is the risk analysis. It forms the basis for appropriate and effective risk management and must be carried out for all direct suppliers and the company's own business unit, as well as for indirect suppliers on an ad hoc basis. The following principles are to be considered:
Own business area and all direct suppliers:
Risk analysis once a year
Reduced, ad hoc due diligence. Action must only be taken if there are substantiated indications of possible violations. A proactive approach for indirect suppliers is nonetheless recommended.
Entire supply chain und own business area:
Ad hoc risk analyses in the event of any changes in business activities
- Child labour
- Forced labour
- Violation of occupational health and safety
- Violation of freedom of association and the right to collective negotiation
- Violations of the prohibition of unequal treatment in employment
- Violations of the prohibition of withholding a decent wage
- Destruction of the natural basis of life through environmental pollution
- Illegal violation of land rights
- Interference by private/public security forces
- Impairment of other human rights