Introduced this year, the German Act on Corporate Due Diligence Obligations in Supply Chains (LkSG) obliges all companies with more than 1,000 employees and their headquarters in Germany to prove that their suppliers and service providers uphold human rights and protect the environment. In turn, our customers and suppliers are also obliged to do so. A corresponding law was enacted at EU level in April.

In cooperation with the consulting company GOcon, Bischof+Klein has developed a partially automated process together with staff from the Compliance, Purchasing, Environmental Protection/Safety, and IT departments. We are required to submit a report to Germany’s Federal Office for Economic Affairs and Export Control (BAFA) by the fourth month following each completed financial year (30.04).

In this report, Bischof+Klein has to prove that not only we, but also our business partners, uphold human rights, observe employee rights, implement work safety measures, and comply with environmental law. An “obligation to make an effort” applies: We are required to endeavor to obtain the corresponding information from suppliers and service providers. And if we ascertain deficits, we have to act towards ensuring that the business partner eliminates them.

• Abstract analysis: A check is performed to determine whether the business partner is headquartered in a country that is classified as critical. Or whether it is involved in a problematic industry.
• Specific analysis: AI is used to analyze and assess critical suppliers with respect to incidents of relevance to the LKSG. Improvements should be achieved together with the supplier on the basis of questionnaires, audits, certificates, or training.
• If none of these measures help, a check is performed to determine whether the supplier concerned can be replaced.