FROM COERCIVE PENALTIES AND FINES
THROUGH THE SUPPLY CHAIN ACT
For many years, business graduate
Saskia Anna Rotterdam has
been working as a certified compliance
consultant for medium-sized
companies. While Ms Rotterdam's
work in recent years was mainly
characterised by questions about
anti-corruption measures and management
training in compliance
management, her current consultations
revolve mainly around the
area of supply chains. "Many SMEs
think that the Supply Chain Due Diligence
Act passed in June 2021 does
not affect them. Many only read
the first sections and think that
the law mainly affects companies
in Germany that have more than
3000 employees. But the law affects
every supplier. And this can quickly
result in fines of up to 50,000 euros
or fines starting at 500,000 euros.
These can be passed on to suppliers,
which can have unpleasant
consequences for medium-sized
companies."
The Supply Chain Act forces companies
to take responsibility. "It is
about corporate due diligence throughout
the supply chain," Rotterdam
said. "Human rights violations
and environmental degradation
related to production and trade
should thus be counteracted. But
in addition to the well-known areas
such as child labour or protection
against torture, the Supply Chain
Act also includes components such
as compliance with nationally applicable
duties of labour protection,
compliance with minimum wage regulations
or the prohibition of unequal
treatment and discrimination."
And this is where things are now
getting very concrete for businesses
in Germany. "Since the introduction
of the law, medium-sized
suppliers have been contacted
by large companies and asked
whether they comply with the regulations
laid down in the law. Often
with a very short deadline. For one
of my clients it was just 10 working
days. If nothing is prepared, it's going
to be tight." Depending on the
contract, some companies grant a
special right to terminate the contract.
Combined with the BAFA fine,
this can threaten the existence of
the company.
BAFA has been increasing its
staff for months. Inspections are increasing.
Medium-sized companies
should also deal with the issue of the
Supply Chain Act and its implementation
in the company. Saskia Rotterdam
helps companies with this - true
to the motto: prevention instead of
reaction, because the risk analysis
set out in § 5 of the Act, in conjunction
with the preventive and remedial
measures, provide companies
with a good and secure basis. "If the
things that are queried are already
prepared in the drawer, companies
are 90 per cent safe. Then they don't
have to act reactively based on tips,
complaints and even investigations
by BAFA. That is very reassuring,"
says Rotterdam. Those who now
believe that this prevention is very
time-consuming and cost-intensive
are mistaken. "All in all, we usually
need about 3-4 days - depending on
IF THE QUESTIONS
IN THE AREAS OF HUMAN
RIGHTS, GRIEVANCE
PROCEDURES,
ANTI-CORRUPTION
OR ENVIRONMENTAL
MANAGEMENT CANNOT
BE ANSWERED
WITHIN THE DEADLINE,
SUPPLIERS ARE
QUICKLY REMOVED
FROM THE SUPPLIER
LIST.
12 INSIGHT 4. 2021