28. February 2023In Supply chain due diligence act2 Minutes

On 17 August 2022, the Federal Office of Economics and Export Control (BAFA) published a handout on the implementation of a risk analysis in accordance with the requirements of the Supply Chain Due Diligence Act (LkSG). This is intended to support companies in implementing their due diligence obligations.

Risk analysis as a fundamental requirement of the LkSG

According to § 4 LkSG, the LkSG requires companies to establish appropriate and effective risk management in order to identify, prevent, minimise or end human rights or environmental risks or violations. In doing so, companies should follow a risk-based approach.

A risk analysis forms the basis for risk management. The aim of the risk analysis according to the LkSG is to gain knowledge of the human rights and environmental risks in one’s own business area and in the supply chain and to prioritise them for further processing. Systematic and comprehensible processes for the identification, weighting and prioritisation of risks must be introduced, whereby each company is entitled to a certain degree of discretion with regard to design and choice of method.

From 2023, the LkSG will apply to companies that generally employ at least 3,000 employees. From 2024, the scope of application will be extended to companies that generally employ more than 1,000 employees.

BAFA handout as an implementation aid

With the publication of the handout on risk analysis, BAFA provides the companies concerned with useful assistance for the implementation of risk analysis. The handout describes the requirements of the LkSG, shows the role of risk analysis in the due diligence process and offers assistance and practical tips for implementation.

The complete handout can be accessed and downloaded at the link below.

In addition, BAFA provides useful FAQs and information on the topic of implementing the LkSG at the link below: