How well prepared are you for the Supply Chain Due Diligence Act (SCDDA)?
Liability risks, compliance violations, bureaucratic effort and potential high costs. The specific interpretation of the SCDDA is not entirely clear yet. However, its taking effect on January 1, 2023 as well as its entailing challenges appear to cause uncertainty among many companies.
The SCDDA initially obliges companies with 3,000 employees to comply with human rights and environmental due diligence obligations. From January 2024 onwards, the law will also apply to companies with 1,000 or more employees. The obligations will then include:
- the maintenance of supply chain compliance
- the introduction of supply chain reporting
- diligent risk assessment of suppliers
- defining internal responsibilities
- setting up reporting hotlines for whistleblowers
In order to comply with the due diligence obligations, many manual processes are required. For the majority of companies, this is hardly manageable, especially since it is currently difficult to estimate the specific resources required. It is also to be expected that adjustments to implement the law will bring about corresponding procedural changes.
Check Your Value Chain – the Supplier Risk Solution for secure supplier management
Reliability across the board: Check Your Value Chain is a cloud-based and legally compliant supply chain due diligence software - unique in its form.
The solution continuously analyzes a large amount of data sources on the respective business partners. In addition to macroeconomic indicators, this includes the evaluation of multilingual media information as well as the sifting of relevant certifications, benchmarks, ratings and indices. In this way, you reliably fulfill your due diligence obligations in accordance with the German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz).
The result: A professional end-to-end process for the analysis and assessment of your entire business partner portfolio. You receive a comprehensive risk assessment of your suppliers, your own business units and, if desired, your customers. This enables you to take immediate action in the event of potential breaches of the SCDDA and protect your company from far-reaching consequences.
Managing supply chain risks in five steps
Identification of the risk via an automated and ongoing risk analysis
Evaluation and prioritisation of the risk-bearing business partner and the identified risks based on the assessment of the respective influence capacity and causation contribution
Definition of preventive and remedial measures through comprehensive, legal position-specific action catalogues
Follow-up of implementation and review of mitigation measures
Check Your Value Chain not only ensures compliance with all due diligence obligations under the Supply Chain Due Diligence Act, but also with the requirements of the Federal Office for Economic Affairs and Export Control (BAFA). In the event of changes to the law, you can rely on an automatic update of the software.
Our assessment methods are market-tested, efficient and enable detailed risk analysis. You gain precise insight into all process steps.
The open SAP-based ecosystem, as well as the connection of our system to the innovative data marketplace Dataland, allows access to various internal as well as external sources, including SAP GRC, SAP Ariba, Coupa, whistleblower systems, Dow Jones and Maplecroft, which can be easily integrated into our solution.
Check Your Value Chain can be easily integrated into your existing system landscape. The maintenance of the interfaces to SAP systems is also very simple.
The integrated dashboard provides you with an overall view of current risk reports and the number of suppliers affected in each case. A risk matrix also shows you the relationship between the potential risk and the turnover or purchasing volume per business partner.
Our Supplier Risk Solution is part of our comprehensive PwC ESG Management Suite. In addition to Check Your Value Chain, this includes solutions from the areas of compliance, EU taxonomy and climate protection.
- Licensing model based on business requirements
- Depending on the number of business partners as well as the number of modules
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Why is the new Supply Chain Due Diligence Act (SCDDA) necessary?
With the new Supply Chain Due Diligence Act, the Federal Government aims to comply with the United Nations Guiding Principles on Business and Human Rights. The reason for this is the outcome of the action plan adopted in Germany in 2016 to prevent human rights violations in the value chain: Too many companies do not sufficiently protect human rights in their global supply chains.
To ensure that respect for human rights and protection of the environment is implemented in a binding manner throughout the entire supply chain of every company, the Supply Chain Due Diligence Act was passed in 2021.
What aspects need to be considered in supply chain compliance?
The following regulations apply to the your own company as well as to direct suppliers:
- Drawing up a policy statement and defining internal responsibilities
- Establishing a risk management system and a risk analysis on the topic of human rights and environmental rights - at least once a year or additionally when there is cause to do so
- When risks are identified, take preventive and remedial action
- Ensuring grievance mechanisms and procedures are in place to identify risks, including with indirect suppliers
The following regulations apply to your own company as well as to direct and indirect suppliers:
- Conducting an effectiveness review of the measures and procedures introduced - at least annually or additionally if there is cause to do so
- Publication of internal documentation and external reporting - once a year (at the latest four months after the end of the business year)
What human rights violations does the risk assessment of suppliers prevent?
The risk assessment prevents child labour, slavery, forced labour, disregard for occupational health and safety, unequal treatment in employment, discrimination, the use of private/public security services and their disregard for human rights, and the withholding of a decent wage.
What environmental obligations does the mandatory due diligence in the Supply Chain Due Diligence Act cover?
The environmental risks covered by the new law include the non-environmentally sound handling, collection, storage and disposal of waste (POPs Convention), the production and use of persistent organic pollutants (POPs Convention), the production of products with added mercury, the use of mercury and mercury compounds, the export and import of hazardous wastes (Basel Convention), harmful soil/water/air pollution, harmful noise emissions, excessive water consumption, and the unlawful clearance and deprivation of land, forests and bodies of water.