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Keeping "the monster" in check: Properly training supply chain law

Keeping "the monster" in check: Properly training supply chain law

Today, millions of people still suffer under the yoke of modern slavery because minimum standards, in particular for the prevention of forced and child labour, are not taken into account. The new Supply Chain Act, which is officially called the "Act on Corporate Due Diligence to Prevent Human Rights Violations in Supply Chains" and is also known as the Due Diligence Act, aims to actively combat this deplorable state of affairs and will in future be an integral part of compliance regulations for companies

It will apply from 2023 - initially to companies with 3,000 or more employees in Germany, and from 2024 finally also to companies with 1,000 or more employees. Violations can result in substantial fines or even exclusion from public procurement. Compliance with the law is monitored by the German Federal Office of Economics and Export Control (BAFA). But what exactly is the content of the new law? Who must comply with it? And for whom is training particularly important?

Know the warning signals and be aware of your own responsibilities

The Supply Chain Act is the first law of its kind. For the first time, the responsibility of companies for compliance with human rights in supply chains is regulated by law. In doing so, it contains a conclusive catalogue of eleven internationally recognized human rights conventions and obliges companies that have their head office, principal place of business, administrative headquarters, statutory seat or branch office in Germany to comply with specific due diligence obligations. These include, in particular, the establishment of a risk management system to identify and actively prevent human rights violations. Appropriate prevention, notification and reporting procedures must also be established. However, despite the higher level of ambition of the new law, criticism continues. 

Many see a problem with implementation in particular. According to a recent survey, more than half of the respondents fear that the new law will further complicate logistics and lead to increased bureaucracy. Critics see the new Supply Chain Act as a bureaucratic monster that companies will have to keep in check in the future.

Creating clarity with training

This makes it all the more important that employees and managers receive comprehensive training on the new legal requirements so that they have solid background knowledge and are aware of their own responsibilities in implementing the law. This is particularly true for companies with global supply chains, especially those in the textile and food industries. 

Training should be provided primarily to employees in logistics, but also in purchasing, compliance and all other departments that are directly or indirectly involved in managing a company's supply chain. They must be aware of the risks along the supply chain and possible red flags, know reporting and notification channels, and understand the importance of the Supply Chain Act for the company's corporate social responsibility (CSR). Only then can the Supply Chain Act make a sustainable contribution to not only improving the human rights situation, but also strengthening the company's compliance in the long run.

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