The SME Compass
Managing supply chains more sustainably

Due diligence implementation made easy

How to respect the environment and human rights in your company and along the supply chain

„Understanding sustainability risks“

„Embedding processes within the company“

„Optimizing supply chain management“

„Fulfilling due diligence obligations“

An online portal with two tools specifically targeted at SMEs

Due Diligence Compass

This tool helps you get started with the due diligence process

Start the journey

Standards Compass

Explore how labels and sustainability initiatives may contribute to the due diligence process.

Start the journey

The Act on Corporate Due Diligence in Supply Chains

What is it about?

In 2021, the German parliament passed the Act on Corporate Due Diligence in Supply Chains (LkSG). It applies to companies with at least 3,000 employees (as of 2023) or at least 1,000 employees (as of 2024).

 

What does this mean for SMEs?

The Act also affects SMEs, albeit indirectly: large companies rely on the cooperation of their suppliers to implement the law, e.g., when analyzing risks and taking preventive and remedial action, if necessary.

 

 

How does implementation work?

The Due Diligence Compass can help your company in implementing the human rights and environmental due diligence processes from the Supply Chain Due Diligence Act step by step.

 

 

 

Due diligence legislations in Europe

Upcoming EU legislation

Due diligence obligations are currently under consideration at EU level to create a level playing field for companies in Europe. Countries like the UK, France and the Netherlands have already passed corresponding laws. On February 23, 2022, the European Commission presented its proposal for a Directive on Corporate Sustainability Due Diligence (CSDD).

 

 

The Netherlands combats child labor

The Dutch Child Labor Act (2019) requires companies operating in the Netherlands to exercise corporate due diligence in the fight against child labor.

 

Reporting requirements in the UK

In 2015, the UK Modern Slavery Act came into force to create more transparency along the supply chains of companies, to disclose modern forms of slavery and labor exploitation and to report on the actions taken. The law applies to UK companies with annual sales of at least £36 million.

 

 

Seizing opportunities, meeting expectations

Customer loyalty & reputation

58% of consumers hesitate to buy if they perceive companies as not sustainable.
(Capgemini, 2020)

Increase in productivity

Responsible supply chain management has the potential to generate direct economic benefits as a result of productivity gains at suppliers.
(ILO, BusinessEurope et al., 2015)

Access to finance

World's largest asset manager "increasingly inclined" to deny approval to the management of companies that are not making sufficient progress on sustainability.
(BlackRock, 2020)

Customer loyalty & reputation

42% of all millennials start or intensify a business relationship with a company because they are convinced of the company's social/ecological contribution.
(Deloitte, 2019)

Increase in productivity

Better occupational health and safety in textile factories increases productivity.
(ILO-IFC Better Work Programme, 2016)

Attractiveness as an employer

For 86% of Germans, the social commitment of a company increases its attractiveness as an employer.
(Manpower Group, 2014)

Attractiveness as an employer

For over 50% of employees, a clear attitude towards sustainability is one of the top 3 incentives when looking for an employer.
(Königstein Agency, 2020)

Optimization of quality management

Improving work processes and conditions in the value chain is a crucial part of a systematic product quality management.
(Global Compact Network Germany, 2012)

Access to finance

Over 60% of the boards of directors of investment companies are prepared to reduce their investments in companies with poor sustainability performance.
(MIT Sloan & BCG, 2016)

Any questions?

The Helpdesk Business & Human Rights provides advisory services to companies and business associations on the topic of human rights due diligence. The service is confidential, individual and free of charge.

Get in touch:

+49 30 7262 17 1062          helpdeskwimr@wirtschaft-entwicklung.de

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