01st Dec 2023
_risk identification and information gathering
A prerequisite of the law is an appropriate risk analysis (§ 5 LkSG) as part of effective risk management. A one-time comment is insufficient since the risks and initial conditions change continuously.
In this context, it is essential to note that the LkSG aims to open up new perspectives: the focus should be on how people and the environment are affected, not on business risks.
What is needed is a systematic and comprehensive analysis of one's business field (§ 6 I, III LkSG). This is how you meet the requirements:
The risk analysis overviews possible risks in the entire value creation framework. The analysis is occasion-related but should be carried out at least annually, according to the LksG.
- Other occasions may include
- The introduction of a new product or service
- New business relationships with suppliers, new regions
- Substantiated knowledge of risks (media reports, incidents in the past, industry-specific grievances )
- The starting point is a sufficient information base:
- As a first step, companies should gain an overview of their purchasing and procurement practices, the structure and actors of their immediate suppliers, and essential and vulnerable groups of people affected by the business activity.
- Typical risk areas are Countries and regions, sectors & industries, business models (production), and business partners (suppliers). The Human Rights Due Diligence Infoportal provides a good overview.
- The law does not specify any measures on how relevant information is collected. Initially, it makes sense to fall back on internal details and mechanisms and to extend existing CSR systems and compliance mechanisms to the LkSG.
- Further insights can be gained through dialogue with industry and interest groups such as chambers of commerce and trade unions.
- It also follows from the law that affected parties should be involved. This can include Employees and residents of a production site or their stakeholders (trade unions, associations, political parties, political representatives).
- Further, proactive measures can be helpful: For example, sending questionnaires to suppliers with exceptional knowledge about certain industry risks and conducting interviews with those affected.
- Risks can also be identified through on-site visits and inspections.