_due diligence in supply chain: clayston wins tÜv as a partner in asia-africa
CLAYSTON LEGAL has gained a vital partner in TÜV AUSTRIA TÜRK. The common goal is to provide comprehensive consulting and certification in legal and contractual obligations around the Supply Chain Sourcing Obligations Act (LkS)). The unique feature of the accreditation is the twofold approach: First, the TWOVISION certification enables European companies to establish compliance standards and effective risk management. To this end, CLAYSTON LEGAL provides comprehensive legal and strategic advice. Effective on-site supplier audits complement the strategic approach. Through the fine-meshed network of TÜV AUSTRIA TÜRK, any production facilities and companies can be inspected across industries in the Asia-Africa region. Inspections can relate to compliance with organisational structure, human rights, and environmental standards.
The Supply Chain Due Diligence Act (LkSG) has been in force since the beginning of 2023. Companies with 3,000 or more employees must evaluate compliance with environmental and human rights in their supply chains (Section 1 LkSG). From the coming year, 2024, companies with 1,000 employees will also be covered. European legislation is also in the pipeline, which is expected to provide stricter regulations - small companies will also be included. The law provides for regular reporting obligations: for example, a report must be submitted to the German Federal Office of Economics and Export (BAFA) once a year after the end of the fiscal year. Compliance will be checked for the first time by BAFA in 2024, which says it has already set up a separate department for this purpose, comprising more than 100 employees.
Legal consequences of the LkSG: What are the consequences of non-compliance?
Failure to comply with the due diligence requirements can result in severe fines. Fines of between 100,000 and 800,000 euros are possible. From annual global sales of 400 million euros, companies face fines of up to two per cent of average annual sales. In addition, companies risk exclusion from public procurement and civil liability.
Risk management and whistleblower systems as central building blocks
Systematic risk management requires, on the one hand, a comprehensive analysis of one's business field (§ 6 I, III LkSG) and, on the other hand, practical methods for detecting risks and grievances. In addition to the inventory, extended documentation (§ 10 I LkSG) and continuous reporting (§ 10 II LkSG) will be necessary for the course.
Once risks and thus fields of action have been defined, it is a matter of preventing damage (prevent), detecting deficiencies (detect) or remedying them (respond). An essential instrument for prevention and remedy can be a whistleblower system. An anonymous "grievance box" should ensure transparency and enable those affected or whistleblowers to complain effectively. As a result, such a mechanism should, on the one hand, ensure that grievances are discovered and proactively addressed.
TÜV AUSTRIA TÜRK the first eye of certification: On-site inspections
TÜV AUSTRIA TÜRK conducts on-site audits and visits along the entire international supply chain in the Asia-Africa regions. For these regions, TÜV AUSTRIA TÜRK is solely responsible as an independent and accredited certification body for management systems and personal and product certification within the TÜV organisation. The auditing includes, among others, the areas:
- Certification of the expertise of persons
- Safety of work equipment
- Anti-corruption management systems
- noise measurement
- Emission measurement of air pollutants
- Energy audit/energy management
- Planning and monitoring of wastewater treatment plants/sewage treatment plants
- IT security
TÜV AUSTRIA TÜRK can cover any industry. In addition, due to the organisational structure of TÜV, the inspection can, in principle, be extended to other countries.
CLAYSTON LEGAL: The second eye Certification: Strategic Legal Consulting
Certification includes strategic consulting, onsite audits along the supply chain, and all legal consulting services as required. The implementation of legal requirements and the fulfilment of liability obligations arising from the LkSG and the contractual design with suppliers can be included. Appropriate contracts with clearly defined specifications on environmental and human rights obligations ensure a successful business relationship in the future. They can open up the possibility of compensation or withdrawal in the event of a breach of contractual obligations.
Quotes
Dr. Thomas Wülfing, Partner at CLAYSTON LEGAL:
"My experience in business practice has shown that many companies have already dealt with compliance - but most need more effective opportunities to get an on-site picture. Therefore, the cooperation with TÜV AUSTRIA TÜRK closed the gap in our consulting practice over the last few years. From now on, we can offer strategic consulting and audits from one source. Such a range of services is unique on the market."
Janki Unal, Regional Manager TÜV AUSTRIA TURK:
"As a technical service provider in the Asia-Africa region, we lacked direct access to European companies, so we are pleased to have found an experienced and international compliance partner in CLAYSTON. Our reviews are more effective when embedded in a strategic framework. Together with CLAYSTON, our service will reach a new level of quality."
ABOUT TÜV AUSTRIA CLAYSTON LEGAL
TÜV AUSTRIA is an independent Austrian company specialising in testing, inspection, certification, education, and training. TÜV AUSTRIA TÜRK is a subsidiary of TÜV AUSTRIA and is solely responsible for the Asia and Africa region.
Contact
Dr. Thomas Wülfing, Partner, Specialist Lawyer for Commercial and Corporate Law