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Finally More Clarity on the Supply Chain Due Diligence Act

January 17, 2023

Finally, there is more clarity about the reporting format of the Supply Chain Due Diligence Act (SCDDA). The Federal Office of Economics and Export Control (BAFA) presented its catalog of questions on reporting on October 14, 2022. An online input mask based on a PDF survey will be available in spring 2023. The catalog of questions will finally provide more clarity on how compliance with the LKSG must be reported.

Here you find all information you need about the Supply Chain Due Diligence Act (SCDDA) and the latest update.

What is the SCDDA?

The Supply Chain Due Diligence Act (SCDDA) comes into force on 1 January 2023. Applicable to all sectors, it requires German companies with more than 3,000 employees in Germany to prevent or at least minimize human rights and environmental rights infringements in their supply chains. From 2024, the Act will additionally apply to enterprises with at least 1,000 employees in Germany.

Who must submit a report?

If your company falls under the scope of the law (3,000 employees and as of 2024 1,000 employees), you are required to regularly publish a report on your compliance with the due diligence obligations outlined in the law. 

You would have to prepare an annual report on the fulfillment of your due diligence obligations in the past financial year. Also, you must submit this report to BAFA no later than four months after the end of the financial year, and the report must be made publicly available on your company's website. 

Form of the report

The report is generated from the answers to a structured questionnaire. The questionnaire contains open and closed questions as well as multiple-choice options. By completely and truthfully answering the questionnaire and by publishing the generated report on the company's website, you are complying with your reporting obligations.

At Daato, we integrated the questionnaire and valuable additional information smoothly into your sustainability reporting dashboard. We link the information required to other reporting standards you already comply with. That way, you have no double entries of the same information which saves you time and improves consistency along all reporting standards.

Content of the report

The following points need to be reported:

  • Whether, and if so, which human rights and environmental risks or due diligence violations your company has identified.
  • What your company has done with reference to the supply chain obligations, including the elements of the policy statements and the measures that your company has taken in response to complaints.
  • How your company assesses the impact and effectiveness of the actions.
  • What conclusions you draw from the evaluation for future measures.
  • Plausibly present that no human rights or environmental risks or violations of corresponding obligations are identified

Examples

A - Strategy and anchoring:

  • Were responsibilities for the monitoring of risk management defined for the reporting period?
  • In which relevant specialist departments/business processes was the anchoring of the human rights strategy ensured within the reporting period?

B - Risk analysis and preventive measures: 

  • Has a regular (annual) risk analysis been carried out during the reporting period to identify, weigh and prioritize human rights and environmental risks?
  • Which preventive measures were implemented in the reporting period to prevent and minimize the priority risks at direct suppliers?

C - Violation Findings and Remedial Actions: 

  • Were there any violations found in your own business area during the reporting period?

D - Complaints procedure: 

  • In what form was a complaints procedure offered for the reporting period?

E - Risk management assessment and conclusions:

  • Is there a process to check risk management across the board for its adequacy, effectiveness, and appropriate consideration of the interests of (potentially) affected people?

How can the report be submitted?

In the future, the reports can be submitted electronically to BAFA. 

How we help you:

  • Selection and definition of performance indicators to measure sustainability performance
  • Setting up sustainability reporting for the Supply Chain Due Diligence Act: setting up automated reporting systems and processes, including associated internal control systems and supporting IT
  • Certification of the compliance of the sustainability report with various standards and guidelines as well as support in fulfilling the SCDDA and other reporting standards (GRI, EU Taxonomy, CSRD) 
  • Support of stakeholder relations and optimization of relationships through optimized, automated reporting
  • Insights and analytics to continuously improve your sustainability strategy, implementation, and metrics

Sources

https://www.bafa.de/DE/Lieferketten/Berichtspflicht/berichtspflicht_node.html

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