Software for the Supply Chain Due Diligence Act (LkSG)

Automated implementation of the Supply Chain Act with VERSO

With the VERSO Supply Chain Platform for sustainability in the supply chain, you can implement the Supply Chain Sustainability Obligations Act (LkSG) and the requirements of the BAFA in your company in a pragmatic, legally compliant and automated manner. From risk analysis to reporting.

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LkSG-compliant supply chains: What matters

The VERSO Supply Chain Hub makes it possible to efficiently implement legal sustainability requirements – such as those of the Supply Chain Duty of Care Act – and to manage ESG risks holistically. With the platform, you achieve an automated analysis of your entire supplier base for fast and efficient implementation of current and future regulatory requirements.

With regard to the Supply Chain Act, affected companies must comply with their human rights and certain environmental due diligence obligations in an appropriate manner. The fulfillment of these obligations is a major cost driver for purchasing.

What is required?

  • Adoption of a declaration of principles
  • Setting up risk management
  • Carrying out a risk analysis
  • Anchoring prevention measures
  • Creation of remedial measures in the event of violations
  • Establishment of a complaints procedure
  • Documentation and annual reporting
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The key points of the LkSG

In parallel to the EU Supply Chain Act, the LkSG aims to make supply chains safer, more transparent and more sustainable. Here is an overview of the most important points.

The company

German companies with more than 3000 employees are initially affected. From 2024, the scope will be extended to companies with 1000 or more employees.

Supply chain

The scope of application extends to the company’s own business units, direct suppliers and indirect suppliers if there are indications of violations or human rights abuses.

Reporting

The results of the risk analysis and the measures implemented must be reported annually to the Federal Office of Economics and Export Control (BAFA).

BAFA inspection

Violations could result in fines and exclusion from public tenders for up to three years.

What does the purchasing department have to consider when implementing?

A proactive and holistic risk management system in the supply chain is crucial in order to efficiently fulfill due diligence obligations.

Risk management should be based on the requirements of the “UN Guiding Principles on Business and Human Rights”. The principles were adopted in 2011 with the aim of combating child labor, exploitation and slavery and anchoring more responsibility for the observance of human rights in companies.

Not only is the Supply Chain Due Diligence Act based on these requirements, but also all national and future standards in the area of due diligence. To this end, it is also important to enable transparency in the upstream supply chain, especially as this is where the greatest risks usually lie dormant.

Screenshot aus der Supply Chain Plattform, Due Diligence Detailansicht

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Implement key requirements of the LkSG with VERSO

The recurring requirements listed below are effort drivers for purchasing, as they require the collection and evaluation of data from suppliers as well as reporting on it. By automating the VERSO Supply Chain Hub, you save considerable resources and ensure efficient implementation.

§5 Risk analysis

Purchasing organizations can have many thousands of suppliers. The VERSO Supply Chain Platform enables an automatic analysis for 100% of your suppliers according to all 13 risk categories of the LkSG in order to identify suppliers with significant risks. With the help of the VERSO Supply Chain Hub, additional transparency can be created about which risk minimization measures the suppliers have already implemented, where the production sites are located and where the raw materials for the products come from.

§8 Complaints procedure

With the VERSO Supply Chain Hub, you have full transparency over your supply chains. This allows you to efficiently follow up on indications of violations – also with regard to the upstream supply chain. We offer a complaints mechanism for LkSG and HinSchG via our partner LegalTegrity.

§7.1-3 Remedial measures

Use the platform to create and manage corrective actions by requesting statements, certifications or audits from the originator, tracking the implementation status and managing the corresponding evidence to end the violation or minimize its extent.

§6.4 Preventive measures for suppliers

Check your suppliers’ processes, request evidence, communicate and review improvement measures. Your purchasers have a clear overview of the suppliers’ progress at all times. Automated multi-tier mapping can be used to create the necessary transparency across several supply chain stages for particularly risk-relevant product groups and raw materials on an ad hoc basis

§10 para 1-2 Documentation and reporting

The VERSO Supply Chain Hub enables qualified reporting for reporting to the BAFA and also for inclusion in the CSR report in accordance with the GRI standards. Our supply chain law software automatically handles the documentation for the obligation to provide evidence and enables comprehensive analyses. The platform offers an automated end-to-end process from risk analysis to the implementation of measures and reporting.

Practical guide: LkSG Compliance in 6 steps

Find out in the guide how you can implement risk management in your supply chain easily and efficiently with the VERSO Supply Chain Hub.