Overview
This article explains what belongs to your own business area under the German Supply Chain Due Diligence Act (LkSG) and why you must include it in your risk analysis.
Relevant for companies within the scope of the LkSG and for the people responsible for the risk analysis.
The individual steps in Tacto are described in the articles (1/5) Record all locations to (5/5) Preventive and remedial measures.
Why your own business area matters
Under Section 5 (1) LkSG, you must identify human rights and environmental risks not only at your direct suppliers but also in your own business area.
The risk analysis must be carried out once a year and on an ad hoc basis, for example if the risk situation changes significantly (Section 5 (4) LkSG).
What belongs to your own business area
Under Section 2 (6) LkSG, your own business area covers every activity of your company aimed at achieving its business objective, i.e.:
every activity to manufacture and exploit products and to provide services,
regardless of whether it takes place at a location in Germany or abroad,
in affiliated companies, also group companies over which the parent company exercises decisive influence.
When decisive influence may exist
Affiliated companies are companies within the meaning of Section 15 of the German Stock Corporation Act (AktG). Whether the parent company exercises decisive influence over a subsidiary must be assessed case by case. Indications include:
a high majority shareholding in the subsidiary
a group-wide compliance system
responsibility for managing core processes in the subsidiary
a legal structure that provides for the possibility of exerting influence
personnel overlaps at (executive) management level
decisive influence on the subsidiary's supply chain management
influence exerted via the shareholders' meeting
a business area of the subsidiary that corresponds to that of the parent company, e.g. because it manufactures and exploits the same products or provides the same services
You can find further guidance in the guide to determining decisive influence.
What you need to record
Record all activities related to manufacturing and exploiting your products and providing your services – at your main plant as well as at affiliated companies in Germany and abroad.
The process in Tacto
Record all locations and name the people responsible
Train the people responsible and your employees
Conduct the risk analysis: send the self-disclosure as a Request and create an Evaluation for each location
Evaluate the answers using the explanations of the legal positions
Create preventive and remedial measures as Tasks and track them
Presentation
You can find detailed information on the risk analysis of your own business area in this presentation (in German): Tacto_LkSG_Eigener_Geschäftsbereich.pdf