Supply Chain Act – companies in exchange with the Federal Office of Economics and Export Control (BAFA) 

• BAFA President Torsten Safarik: “Strong companies and strong human rights belong together.” 

• After almost three months: Where do German companies stand in terms of the Supply Chain Act? 

• High demand for information at the ‘LkSG Practice Day’ organized by the Mannheim-based software company osapiens 

Risk management, supplier monitoring, complaints procedures and new guideline by the Federal Office of Economics and Export Control (BAFA): the German Supply Chain Act (LkSG) continues to occupy German companies with more than 3,000 employees who are affected by the first wave of the law. 

For almost three months now, they have been obliged to fulfill their responsibility in the supply chain by implementing human rights and environmental due diligence obligations. 

Yesterday’s ‘LkSG Practice Day’, which was organized by the Mannheim-based software company osapiens and attended by around 200 representatives from German companies from a wide range of industries, showed that the need for discussion and information in the affected logistics, purchasing, compliance, CSR and legal departments in German companies is still very high. 

The ‘LkSG Practice Day’ kicked off with a keynote speech by the President of the Federal Office of Economics and Export Control (BAFA), Torsten Safarik, who spoke out in favor of further intensive dialogue between companies and BAFA. 

“BAFA’s guiding principle in implementing the Supply Chain Act is that strong companies and strong human rights belong together. Only companies with fair, sustainable and robust supply chains are strong companies that secure jobs in Germany and create prosperity”, said Torsten Safarik, President of BAFA. “We are aware that we must not overburden companies and must always keep an eye on business realities. However, we will not be satisfied with mere declarations of intent. It is important for us to be able to understand the efforts made by companies to comply with their due diligence obligations. To this end, BAFA is creating clear guidelines in order to make the procedures efficient and streamlined for companies. 

This was followed by numerous presentations, discussion rounds and workshops on the requirements and challenges of the Supply Chain Act, in which those present were able to share their experiences and insights from practical experience in recent months and jointly develop synergies for possible solutions. In this context, the EU directives that will come into force in 2024, the Corporate Sustainability Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDD), which will significantly expand the type and scope of reporting obligations to be carried out by companies in terms of sustainability reporting, were also the subject of lively discussion. 

“Companies should continue to focus on promoting interdisciplinary work in the affected departments, clearly defining responsibilities and redesigning processes. Especially when it comes to data collection and consolidation, companies can rely on digital solutions to implement these new processes more effectively. Ultimately, the goal must be to establish standards that create transparency along supply chains quickly, easily and in compliance with the law with just a few clicks”, said Alberto Zamora, Co-founder & CEO, osapiens. 

Further learnings from the exchange with peers: Companies that fall under the LkSG in 2024 should start planning and implementing their LkSG projects quickly now. Companies that are already subject to the law should continue to monitor the legislation closely and prepare for changes and extensions to the LkSG in order to reassess and adapt processes if necessary. A large number of the companies present stated that they had realized during the implementation of their LkSG projects that the use of LkSG software brings many advantages in view of the enormous amounts of data. 

In 2021, osapiens began working closely with selected customers and the renowned commercial law firm Graf von Westphalen on a digital solution for the simple, automated and, above all, legally compliant implementation of the Supply Chain Act. To this end, a large-scale survey of companies in Germany affected by the first wave of the law was conducted in cooperation with the Federal Ministry for Economic Cooperation and Development (BMZ) between February and September 2022. The aim was to identify the needs of companies and to be able to offer tailor-made digital solutions. The results of the survey can be found here. 

The ‘LkSG Praxistag’ is already the third major information event organized by the software company osapiens for companies on the subject of the Supply Chain Act. The next event in the series will take place in Mannheim on June 20, 2023.