Finally more clarity on the Supply Chain Due Diligence Act

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 catalogue of questions on reporting on October 14, 2022. An online input mask based on a PDF survey will be available in spring 2023. The catalogue 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 Supply Chain Due Diligence Act?

The Supply Chain Due Diligence Act (SCDDA) comes into force on 1 January 2023. This rule applies to all industries in Germany and mandates that companies with more than 3,000 employees operating in Germany. They must work to prevent or reduce any violations of human rights and environmental regulations 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 this scope of the law, 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 fulfilment of your due diligence obligations in the past financial year. Also, you must submit this report to the Federal Office of Economics and Export Control (BAFA) no later than four months after the end of the financial year. Furthermore, 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 due to the Supply Chain Due Diligence Act:

• 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

Questions to ask yourself

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 complaint's 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?

The reports are to be submitted annually to the Federal Office for Economic Affairs and Export Control (BAFA). According to recent updates, companies will soon be able to submit their reports 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

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Sources

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

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