The "Act on Corporate Due Diligence Obligations for the Prevention of Human Rights Violations in Supply Chains" has been in force since the beginning of 2023 and is at least as rich in content as the name itself. But what is behind the long and tongue-twisting name? We give you an overview of why it is so important for companies, employees and the environment and what role Sustainable Meetings Berlin plays in this.
Human rights violations take place every day and also in our direct environment. The Supply Chain Due Diligence Act for the first time sets out corporate responsibility for compliance with human rights in global supply chains. These include protecting children from child labor, the right to fair wages and protecting the environment.
Last month, at the Digital Expert Day hosted by Berlin Event Network e.V., there was an introduction to "Human Rights Due Diligence in the Supply Chain" by Christian Oblasser. He is the managing director of trias consulting and advises companies on sustainability management and compliance with regulations in sustainability reporting. trias consulting has been involved in the creation of the sustainability standards for Sustainable Meetings Berlin, Sustainable Tourism Berlin and Sustainable Berlin Commitment, among others. In the following, we have compiled all the insights from the Digital Expert Day.
Human rights are fundamental, inalienable rights and freedoms that belong to every person by virtue of their existence and dignity. In the context of the German Supply Chain Due Diligence Act, human rights take on special significance, as the act aims to ensure corporate responsibility for compliance with these rights along global supply chains.
Human rights encompass various aspects, including:
► The right to physical integrity and health
► The right to freedom of assembly and collective bargaining
► Prohibition of slavery, forced labor, torture, and child labor
► Environmental protection to ensure health
The law strengthens respect for basic human rights and environmental protection. These include:
► Protection against child labor, forced labor and discrimination.
► Protection against land grabbing
► Occupational health and safety
► Right to fair salaries
► Right to form trade unions
► Protection against violations of environmental law
The application of the Supply Chain Act extends across various industries and brings with it a range of risks. Other relevant topics include:
► Accidents as well as injuries
► Spread of communicable diseases
► Exposure of workers to protests
► Language barriers with regard to instructions and briefings
► Passport acceptance
► Wage dumping
► Withholding of wages
► Excessive working hours
► Excessive placement fees and rent payments
► Dangerous working conditions
► Inadequate work equipment
► Degrading treatment due to ethical origin
► Precarious housing conditions
► Access to medical care and education
► Data protection and privacy
► Consumer protection and product responsibility
► Undeclared work and employment of persons with irregular residence
► Discrimination in the workplace
► Freedom of association and the right to freedom of expression
► Gender equality
► Corruption and bribery
Since 2023, companies based in Germany with a size of 3,000 employees or more (from 2024 also for companies with at least 1,000 employees) are obliged to fulfill their human rights responsibilities and due diligence obligations in their supply chains.
Establishment of an in-house responsibility
Establishment of a risk management system for supply chains
Conducting regular risk analyses
Issue and publication of a policy statement
Anchoring of prevention measures in the own business area, towards direct suppliers and - if there are indications of possible violations - towards indirect suppliers
Take corrective action
Establishment of a complaints procedure
Supply chain management documentation and reporting
The rights of affected people are to be strengthened through compliance with due diligence obligations. At the same time, however, this law is also intended to give companies legal certainty and create fair competitive conditions.
By acting responsibly and examining their supply chains for human rights violations, companies not only contribute to global social justice but also lay a foundation for sustainable and ethical business practices. Thus, the Supply Chain Due Diligence Act becomes a tool that supports both the protection of human rights and the promotion of corporate integrity in business.
The Supply Chain Act has far-reaching implications for many industries, including the MICE industry. The Act introduces several important requirements that companies must meet to ensure that they act responsibly and sustainably.
One of the most important requirements is the duty to inform. This means that companies must be able to track their supply chains and provide detailed information about their suppliers, materials and manufacturing processes. For the MICE industry, this requirement is particularly important, as event organizers must ensure that all goods and services they use are sourced ethically and sustainably. Services within an event planning process include everything from venue selection and catering to logistics, scheduling and on-site management of the event.
But the Supply Chain Act also leads to certain governance requirements that companies must adhere to. This means that companies must establish processes and procedures for managing their supply chains, including risk assessment and documentation. This involves identifying potential risks and taking steps to minimize them. By taking a proactive approach to supply chain management, companies can reduce the risk of negative impacts on people and the environment and improve their overall sustainability performance. For example, a catering company's regular contact with regional producers can support sustainable food production, making its offerings more sustainable. At the same time, risks from breached due diligence can be addressed as well as minimized and a resilient supply chain can be designed.
Finally, the Supply Chain Act requires companies to have processes and documentation in place to ensure that the company is operating in compliance with the law. This includes keeping detailed records of potential risks in the supply chain, any preventative measures, and reporting on what is being done.
In summary, the Supply Chain Act will be of indirect importance to the MICE industry. Large contracting companies will require their service providers to comply with human rights due diligence requirements and evaluate compliance measures. Directly, the Act will help ensure that companies in the industry operate responsibly and sustainably through the introduction of governance requirements, the obligation to provide information, and the requirement for risk assessments and documentation.
Benefits of Sustainable Supply Chain Management
Increase in Efficiency
Discovery of New Opportunities
Minimization of Risks
The benefits of responsible supply chain management extend beyond mere compliance with laws. By implementing sustainable practices and fostering transparency, companies can build and deepen the trust of their stakeholders. Strong stakeholder relationships, in turn, lead to a more resilient supply chain, strengthening the economy in the long run.
The versatility of the risk areas involved highlights the need for a holistic and cross-sector approach to meet the requirements of the Supply Chain Due Diligence Act while promoting ethical and sustainable business practices.
The core of the law is to minimize or completely prevent human rights and environmental rights violations in supply chains through sound risk management. This benefits the people within the supply chains, the companies and also the consumers.
The law provides all German (and in future also European) companies with fundamental legal certainty and a reliable basis for action for sustainable supply chain management, which considers all stages of the value chain of goods and services from an economic, social and ecological perspective. On the consumer:inside side, the Supply Chain Act provides certainty that large companies in particular, and SMEs in Germany in the future, will have to place a stronger focus on fair and sustainable supply chains.
As ordering parties, companies will also expect and even demand this responsibility from their partners in the MICE industry. Due to the so-called Supply Chain Act and other sustainability obligations, the demand for certified processes, evidence and data in the area of corporate social responsibility is already increasing in tenders.
With the catalog of criteria according to which Berlin companies can be certified with the visitBerlin sustainability programs Sustainable Tourism Berlin and Sustainable Meetings Berlin, the essential required areas are covered: governance, risk and compliance, environment, society and economy - and thus an ability to provide information to clients on the supply chain due diligence law is established.
BTW: Since February, Berlin has been the first German region with an internationally recognized catalog of sustainability criteria for the Visitor Economy. The Global Sustainable Tourism Council (GSTC) has recognized the programs' sustainability criteria for the tourism and events industry as equivalent to the GSTC industry criteria for hotels and tour operators.
Are you interested in becoming certified as a Sustainable Partner? Then get in touch with our colleagues from the Sustainable Meetings Berlin team.
The Supply Chain Due Diligence Act, also known as the Supply Chain Act or LkSG, was enacted in 2023 by BAFA and establishes corporate responsibility for compliance with human rights and environmental standards in global supply chains. It primarily applies to companies based in Germany with a size of 3,000 or more employees (from 2024, it will also apply to companies with at least 1,000 employees).
Companies must identify internal responsibilities, establish a risk management system, conduct regular risk analyses, issue and publish a policy statement, implement preventive measures, take remedial actions, and set up a complaint procedure. Additionally, documentation and reporting on supply chain management are also required.
The Supply Chain Act has significant implications for the MICE (Meetings, Incentives, Conferences, and Exhibitions) industry, particularly through the introduction of requirements such as information obligations, governance standards, and the need for risk assessment. Event-organizing companies must ensure ethical and sustainable procurement practices and provide detailed information about suppliers and manufacturing processes.
Responsible supply chain management goes beyond meeting legal requirements, offering benefits such as enhanced corporate image, efficiency gains, opportunity identification, and risk minimization. Transparency and sustainable practices also foster stakeholder trust and contribute to a more resilient supply chain.
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