Germany’s Supply Chain Act: additional complaints mechanism poses risks for businesses

But one compliance expert has said that businesses should ensure that they have their own complaints process in place to deal with claims that they are not in compliance with the new law.

The Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG)  has been in force since 1 January 2023. It obliges large companies with at least 3,000 employees in Germany to take measures to ensure that they and their suppliers from Germany and abroad comply with environmental and social standards. The companies must report annually on their compliance with the law.

Since the beginning of 2023, the Federal Office of Economics and Export Control (BAFA), which is responsible for the implementation and monitoring of the new law, has made a complaint form available on its website, which can be used to report violations of the LkSG by businesses. The form is available in English, French, Spanish and German.

Dr Eike Grunert, compliance expert at Pinsent Masons, said: "The reporting channel established by BAFA is not provided for by law. It bears the risk that numerous complainants, possibly anonymously, contact the authority directly and thus trigger supervisory measures. Companies should therefore efficiently design their own complaint management as provided for by the LkSG in order to be able to receive and deal with complaints internally as a matter of priority."

In order to file a complaint, one must be directly affected by a violation or the effects of the violation. A complaint must clearly identify the company against which the complaint is directed. "In the case of foreign companies, this company must be a supplier of a German company," BAFA said. The complaint should also “comprehensibly and as comprehensively as possible describe" the facts of the violation. The form guides the complainant step by step through the violation to be reported and asks for specific details.

BAFA said that it would examine the complaints received and take any necessary further action. Also, any person who files a complaint is to receive feedback on it through BAFA - unless the complaint was filed anonymously.

Last autumn BAFA provided information on compliance with the LkSG for companies covered by the law. However, experts said that many questions regarding practical implementation remained unanswered.