The German Supply Chain Due Diligence Act
A comprehensive explanation and translation of the Supply Chain Due Diligence Act into Serbian
The German Supply Chain Due Diligence Act entered into force in 2023 and was initially applicable to German companies with at least 3,000 employees. As of 2024 also smaller companies with at least 1,000 employees fall under the German Supply Chain Due Diligence Act.
The German law sets for the first time a corner stone for due diligence obligations in supply chains of German establishments (companies incorporated in Germany, branches, affiliated companies) aiming at minimizing or removing risks or breaches of human labour and ecological rights in their direct or indirect supply chains.
Inspired by the UN Guiding Principles and the OECD Guidelines, the German Supply Chain Due Diligence Act introduces obligatory due diligence measures such as risk analysis, risk management system, complaints procedure, reporting. The law imposes a mean of obligation to companies; hence the companies cannot be held responsible or the violation of human rights in the supply chain, but for implementation and fulfilment of due diligence measures towards the supply chain. The sanctions for the companies falling under the German Supply Chain Due Diligence Act are limited to monetary fines and ban in participation in public procurements, whereas the law does not provide legal basis for damages to the victims of the violated of human rights.
In international supply chains and distribution systems the German Supply Chain Due Diligence Act has extra territorial implications.
For Serbian companies the German Supply Chain Due Diligence Act imposes the following:
- if Serbian companies are subsidiaries of German companies, the entire set of obligations of the German law will apply downstream
- if Serbian companies are (direct) suppliers or distributors of German companies, they will be contractually obliged to comply with the non-violation obligation of human rights and to actively participate in due diligence measures imposed (risk assessment, complaints procedure, preventive and corrective measures) by the German Supply Chain Due Diligence Act
Germany is Serbia’s largest foreign trade partner continuously since 2016. Numerous companies in Serbia operate as suppliers and as distributors to German companies and will be inevitably affected by German Supply Chain Due Diligence Act – LkSG. All international conventions the German Supply Chain Due Diligence Act refers to, are signed and ratified in Serbia, except the Minamata Convention which was signed but not ratified yet.
Serbian companies should early enough comply with prescribed standards of the German Supply Chain Due Diligence Act – LkSG and preferably impose risk management systems accordingly. This will enable partnerships and businesses with German companies and certainly lead to better business results as a reward and incentivization of socially responsible businesses.
To support the implementation of the German Supply Chain Due Diligence Act and to improve the understanding of its provisions to Serbian supply chains and distributors TSG has translated the German Supply Chain Due Diligence Act – LkSG into Serbian in order to enable Serbian companies to get introduced with the entire law and better understand its aim
Please find the translation of the German Supply Chain Due Diligence Act into Serbian here and our article explaining the effects thereof on Serbian entities.
KEYWORDS: Business partnership, Complaints procedure, Compliance, Corporate social responsibility, Corrective measures, Distributors, Due diligence obligations, Environmental rights, German companies, German Supply Chain Due Diligence Act, Human rights, International trade, Labour rights, Lieferkettensorgfaltspflichtengesetz (LkSG), Minamata Convention, Monetary fines, OECD Guidelines, Preventive measures, Public procurement, Reporting, Risk analysis, Risk management system, Sanctions, Serbian companies, Socially responsible business, Subsidiaries, Suppliers, Supply Chain Due Diligence Act, Supply chains, UN Guiding Principles.
