Supply Chain Due Diligence Act (LkSG)

What is the Supply Chain Due Diligence Act?

GSI GmbH and FAIR GmbH (hereafter referred to as "GSI & FAIR") are affected by the requirements of the German Supply Chain Due Diligence Act (LkSG) as of 1 January 2024. The LkSG is a law on human rights and environmental due diligence to prevent human rights violations in supply chains. It serves to improve the international human rights situation by ensuring that corporate supply chains are managed responsibly.

As part of the LkSG, GSI & FAIR are obliged to observe the following prescribed due diligence obligations in their supply chains in an appropriate manner:

  • The establishment of a risk management system
  • The definition of internal responsibilities
  • Conducting regular risk analyses
  • The publication of a policy statement
  • Establishing preventive measures in the company's own business area and towards direct suppliers
  • Taking remedial measures
  • The establishment of a complaints procedure
  • The implementation of due diligence obligations with regard to risks at indirect suppliers
  • Documentation and reporting

 

The globalised economy with increasingly complex supply chains and growing competitive pressure harbours the risk of human rights violations. Companies therefore have an increasing responsibility to effectively protect these rights in their own business activities and along the value chain. Companies have a responsibility to respect human rights. They are important social actors that influence local structures and people's lives through their business activities and business relationships. They bear the risk that their activities - directly or indirectly - have a negative impact on human rights. This is partly due to the increasing integration of economic activities worldwide and the fact that supply chains have become longer and more complex in recent decades. Recognising this risk is part of corporate responsibility. The following questions need to be asked: Which activities could have a negative impact on human rights at which point in the supply chain? How likely are the negative impacts and how serious are they? Only a company identifying and recognising the risks can avoid or mitigate adverse impacts. 

Corporate behaviour can adversely affect human rights protected by international conventions along the entire supply chain for all products in a wide range of ways. These human rights include, for example, the prohibition of child labour, protection against slavery and forced labour, freedom from discrimination, protection against unlawful deprivation of land, occupational health and safety and protection against health hazards in connection with occupational activities, the prohibition of withholding a fair wage, the right to form trade unions or to name employee representatives, the prohibition of causing harmful soil or water pollution as well as protection against torture.

This means that human rights and environmental due diligence obligations are an integral part of corporate due diligence, which in turn forms one of the pillars of the United Nations Guiding Principles on Business and Human Rights. The LkSG is, therefore, the national legal codification for the binding implementation of these guiding principles in business activities for the benefit of people and the environment.

 

GSI & FAIR create jobs, purchase goods, primary products and services internationally and utilise local resources. Hence, we have an impact on the living and working conditions of employees as well as on other direct and indirect stakeholders and affected parties: customers, suppliers, local residents, the economic and social situation and the environment. This applies both in the area of our own production and along the entire supply and value chains. As a result of these actions and effects, there is a fundamental risk of violations of the above-mentioned human rights. This risk is increased by the fact that electronic assemblies, magnets and machine components such as those used at GSI & FAIR may contain critical raw materials and in certain cases originate from countries where compliance with the above-mentioned human rights is not always guaranteed. GSI & FAIR are, therefore, affected by these issues.

The fulfilment of the human rights and environmental due diligence obligations set out in the LkSG is a high priority for GSI & FAIR. Violations can have serious consequences for our company, our employees, our business partners and other affected parties. It is, therefore, important to recognise them at an early stage in order to initiate appropriate countermeasures and avert potential damage. Information from our own company or institution and from external persons is a key way in which risks and violations can be recognised. One of the duties of due diligence is, therefore, to set up and operate a complaints procedure.

Complaints procedure in accordance with LkSG

In accordance with Sections 8 and 9 of the German Supply Chain Due Diligence Act, GSI & FAIR has implemented a complaints procedure through which internal and external persons can inform the company of human rights or environmental risks or violations in its own business area as well as in the supply chain.

  • The digital reporting system can be used to submit a complaint or a report relating to the LkSG. It can also be used to raise compliance concerns.
  • The following instruction is available for the use of the digital reporting system.
  • Further information on the main features of our complaints procedure, access to the procedure, the process and responsibilities can be found in our rules of procedure.

The LkSG in a nutshell (video / German only)

Contact / Contact person

Human rights officer

Pia Geppert
Telephone: +49 6159 71 3641
E-Mail: lieferkettengesetz(at)gsi.de
Short-URL website: https://www.gsi.de/en/lksg


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