In June 2021, BCG and CMS published a White Paper entitled “Managing Supply Chain Risk – A legal and strategic perspective”. In view of the rising number of laws obligating companies to prevent and mitigate risks relating to human rights and the environment in their supply chains, the White Paper provided an overview of selected laws, and offered practical guidance on how to manage such risks.
One notable example of national supply chain regulation is the German Supply Chain Due Diligence Act (“German Supply Chain Act”), which was adopted in June 2021 and will come into force on 1 January 2023. The German Supply Chain Act sets out new due diligence obligations for in-scope companies and their management, such as conducting a risk analysis, issuing a policy statement, implementing preventive measures and remedial actions, continuously documenting the fulfillment of due diligence obligations, and the publication of a yearly report.
In addition to national supply chain regulation, the protection of human rights and the environment is also the subject of various legislative initiatives at the European Union level. In February 2022, the European Commission published its proposal for a directive on corporate sustainability due diligence (“EU Proposal”), which sets out due diligence obligations that go beyond the German Supply Chain Act.
Many companies are already preparing for the implementation of these new requirements. Our new paper therefore has two objectives. First, we will compare the EU Proposal with the German Supply Chain Act in order to shed light on the expected additional requirements. We will then provide an overview of the main challenges for companies in implementing the relevant requirements, together with some of the practical lessons we have learned about this implementation from the standpoint of both legal and strategic consulting practices.
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