FAQs

LkSG, also known as the Supply Chain Due Diligence Act, is a German law that aims to hold companies accountable for human rights and environmental violations in their supply chains.

On June 11, 2021, the German parliament passed the Supply Chain Due Diligence Act (LkSG, or Das Lieferkettensorgfaltspflichtengesetz). The law, also known as the German Supply Chain Act and the Due Diligence Act came into force on January 1, 2023.

It currently applies only to companies with at least 3,000 employees. Starting in 2024, the scope of application will then be expanded so that companies with 1,000 or more employees will be covered.

LkSG mandates covered companies to conduct due diligence on their supply chains to identify and mitigate human rights violations and environmental harm.

• Publication of violations: The law provides that companies that violate due diligence obligations may be publicly named. This can lead to significant damage to the company’s reputation.
• Companies can be fined up to 2% of their annual revenue. In case of particularly serious violations, the fine can amount to up to 4 percent of the company’s annual turnover.
• Companies can also be faced with compensation claims from those affected or harmed by violations of the law.
• Companies that violate the law can be excluded from public procurement.
• In particularly serious cases of violations of the law, criminal consequences may also follow for the individuals and companies involved.

No, LkSG also applies to foreign companies that meet the criteria of having more than 3,000 employees and doing business in Germany.

No

Yes, LkSG addresses both human rights violations and environmental harm in supply chains.

For more detailed information, download our Guide to LkSG.Reach out to our team to book a free live demo of FRDM supply chain risk management software.

The UFLPA was designed to address the issue of forced labor in the Xinjiang Uyghur Autonomous Region of China, where there have been reports of human rights abuses and forced labor practices.

President Biden's historic passing of the Uyghur Forced Labor Prevention Act (UFLPA)on December 23rd 2021 serves to protect vulnerable workers by prohibiting any goods, wares, articles or merchandise mined produced in whole or part within China’s Xinjiang Uyghur Autonomous Region from entering into America, unless they are able to prove through clear and convincing evidence that these items were not subjected to forced labor practices as specified by Section 307 of the Tariff Act of 1930.

Any company importing into the United States.

Ensure that zero suppliers or sub-suppliers operate in the Xinjiang region.

Companies found to be violating this law by knowingly sourcing products or materials from entities engaged in forced labor in Xinjiang could face legal penalties, including fines and import restrictions. Additionally, non-compliance with the UFLPA can lead to significant reputational damage, as it may be seen as condoning or benefiting from human rights violations. Consumers, investors, and other stakeholders are increasingly concerned about ethical sourcing and corporate responsibility, making adherence to the UFLPA crucial for maintaining trust and brand integrity. Companies must exercise due diligence in their supply chains to ensure compliance with the UFLPA and demonstrate their commitment to respecting human rights and labor standards.

No

No

For more detailed information, download our Guide to the UFLPA.Reach out to our team to book a free live demo of FRDM supply chain risk management software.

The Corporate Sustainability Due Diligence Directive (CSDDD) is a groundbreaking legislative proposal put forth by the European Commission to address the environmental and human rights impacts of companies operating within the European Union. The directive aims to enhance corporate accountability and responsibility by requiring companies to conduct comprehensive due diligence on their supply chains and business operations. By implementing the CSDDD, companies will be mandated to identify, prevent, and mitigate adverse environmental and social impacts throughout their value chains, both within the EU and globally. This directive represents a significant step towards fostering sustainable and ethical business practices, ensuring that companies operating in the EU take concrete actions to uphold human rights, protect the environment, and contribute positively to society.

The CSDDD was first proposed by the European Commission in February 2022, and is currently being negotiated by the European Parliament and the Council of the European Union. The CSDDD is expected to be adopted by the end of 2023 and come into force in 2024.

The Corporate Sustainability Due Diligence Directive (CSDDD) impacts companies operating within the European Union, irrespective of their size or industry. The directive applies to a wide range of entities, including large corporations, small and medium-sized enterprises (SMEs), public and private companies, and subsidiaries of multinational corporations, if they conduct business activities within EU member states. The CSDDD is particularly relevant to companies with complex supply chains that extend beyond EU borders, as it requires them to conduct comprehensive due diligence on their suppliers and business partners to ensure sustainable and responsible practices. By covering a broad spectrum of companies, the CSDDD aims to create a level playing field for corporate sustainability and promote ethical and environmentally responsible conduct across various sectors and industries within the EU.

• Mandatory Due Diligence: Companies will be required to conduct comprehensive due diligence on their supply chains and business operations to identify, prevent, and mitigate adverse environmental and human rights impacts.
• Risk Assessments: Companies must perform risk assessments to identify and prioritize potential environmental and human rights risks within their operations and supply chains.
• Supply Chain Transparency: Companies will be mandated to disclose information about their supply chain practices, including supplier lists and efforts to address sustainability issues.
• Remedy Mechanisms: Companies must establish effective mechanisms for addressing and remedying environmental and human rights violations that are identified through due diligence.
• Reporting and Disclosure: Companies will be required to regularly publish sustainability reports that detail their efforts to comply with the CSDDD requirements and address sustainability issues.
• Board Accountability: Companies must ensure that their boards are actively engaged in overseeing sustainability due diligence and compliance efforts.
• Non-Financial Reporting: Companies may need to integrate non-financial information, such as environmental and social metrics, into their annual reports.
• Collaboration and Partnerships: Companies may be encouraged to collaborate with stakeholders, including civil society organizations and trade unions, to enhance sustainability efforts.
• Enforcement and Penalties: The directive may specify enforcement measures and penalties for companies that fail to comply with the requirements, including fines and sanctions.

Non-compliance with the Corporate Sustainability Due Diligence Directive (CSDDD) can have significant consequences for companies operating within the European Union. As a legislative proposal aimed at enhancing corporate sustainability and responsibility, the CSDDD is likely to introduce strict regulations to ensure companies conduct thorough due diligence on their supply chains and business operations. Non-compliant companies may face legal penalties, including fines and sanctions, imposed by EU member states for failing to meet the CSDDD requirements. Moreover, companies risk reputational damage, as stakeholders, including consumers, investors, and business partners, increasingly prioritize ethical and sustainable practices. Non-compliance with the CSDDD can undermine a company's credibility and trustworthiness, leading to potential loss of business and opportunities. To avoid these consequences, companies must be proactive in adopting sustainable and responsible practices that align with the CSDDD's requirements, thereby demonstrating their commitment to promoting human rights, protecting the environment, and contributing positively to society.

Potential industry sectors that could be affected by the CSDDD may include, but are not limited to:
• Retail and Apparel
• Electronics and Technology
• Automotive and Transportation
• Food and Beverage
• Pharmaceutical and Healthcare
• Extractive Industries (Mining, Oil and Gas)
• Construction and Real Estate
• Financial Services and Banking
• Manufacturing
• Hospitality and Tourism

The CSDDD's main objective is to enhance corporate sustainability and responsibility, which typically encompasses both social and environmental dimensions. Therefore, it is reasonable to expect that the directive would require companies to conduct due diligence not only on human rights issues but also on environmental impacts within their operations and supply chains. This could include requirements related to environmental risk assessments, supply chain transparency on environmental practices, and reporting on environmental metrics and performance.

Visit our compliance page on FRDM.co

The UK Modern Slavery Act, enacted in 2015, is a comprehensive piece of legislation aimed at combating modern slavery and human trafficking. The Act requires businesses operating in the UK with an annual turnover above a certain threshold to publish an annual statement outlining the steps they have taken to prevent slavery and human trafficking in their operations and supply chains. The statement may cover areas such as company policies, due diligence processes, and training efforts to address modern slavery risks. The Act also established tough penalties for those convicted of modern slavery offenses, including life imprisonment. By increasing transparency and accountability, the UK Modern Slavery Act seeks to raise awareness, encourage responsible business practices, and drive collective action against the scourge of modern slavery.

What companies does the UK Modern Slavery Act affect?
• Companies Registered in the UK: The Act applies to companies that are registered in the UK, including those incorporated under the Companies Act 2006.
• Annual Turnover Threshold: The Act applies to companies with a total annual turnover of £36 million or more. If a company, along with its subsidiaries, meets this threshold, it falls within the scope of the Act.
• Carrying on Business or Part of Business in the UK: The Act also applies to companies that are not registered in the UK but conduct business or part of their business within the UK. This includes foreign companies with operations, branches, or offices in the UK.

1. Modern Slavery Statement: Companies with a total annual turnover of £36 million or more must publish a Modern Slavery Statement on their website. This statement outlines the actions they have taken to address and prevent modern slavery and human trafficking within their operations and supply chains.
2. Due Diligence: Companies are expected to conduct due diligence on their supply chains to identify and assess modern slavery risks. This includes understanding the potential risks in their supply chains and taking appropriate actions to mitigate those risks.
3. Risk Assessment: Companies must conduct risk assessments to identify areas within their operations and supply chains that are most vulnerable to modern slavery and human trafficking.
4. Training and Awareness: Companies should provide training to staff and employees involved in supply chain management to raise awareness of modern slavery risks and how to identify and respond to potential instances.
5. Monitoring and Reporting: Companies are encouraged to establish systems to monitor and evaluate their efforts in combatting modern slavery and report on the progress and impact of their actions.
6. Board Approval: The Modern Slavery Statement must be approved by the board of directors and signed by a director or senior executive to ensure top-level commitment to addressing modern slavery risks.

While the Act does not impose direct fines for non-compliance, companies failing to meet their reporting obligations may face negative public perception and potential damage to their brand reputation, especially if their stakeholders, including customers, investors, and business partners, expect transparency and responsible business practices. Companies may also face criticism from NGOs and other civil society organizations, which could lead to consumer boycotts or divestment by investors.

Furthermore, the UK government encourages voluntary compliance with the Act's provisions and has announced plans to strengthen the Act's enforcement and penalties in the future. As a result, non-compliant companies may face increased scrutiny and potential legal consequences if the Act's enforcement is enhanced in the future.

On May 11, 2023, Canada passed An Act to enact Fighting Against Forced Labor and Child Labour in Supply Chains Act and to amend the Customs Tariff (the “Act”). The Act will create supply chain transparency and reporting obligations for certain companies as part of Canada’s efforts to fight against forced labor and child labor in Canadian supply chains. The Act requires companies with at least $330 million in annual gross revenue to report on measures taken to address the risk of forced labor in their operations and supply chains.

Covered companies will be required to report to the Minister of Public Safety and Emergency Preparedness (the “Minister”) on or before May 31 of each year. Group companies may provide a joint report.

The report must include the steps the company has taken during the previous financial year to prevent and reduce the risk that forced labor or child labor is used at any step of the production of goods in Canada or elsewhere by the company, or of goods imported into Canada by the company.

The report must also include information about the company’s:
1. Structure, activities and supply chains;
2. Policies and due diligence processes in relation to forced labor and child labor;
3. Parts of its business and supply chains that carry a risk of forced labor or child labor, and the steps it has taken to assess and manage that risk;
4. Measures taken to remediate any forced labor or child labor;
5. Measures taken to remediate the loss of income to the most vulnerable families that results from any  measure taken to eliminate the use of forced labor or child labor in its activities and supply chains;
6. Training provided to employees on forced labor and child labor; and
7. Methods for assessing its effectiveness in ensuring that forced labor and child labor are not being used in its business and supply chains.

FRDM's supply chain mapping software excels in handling emerging risks and unforeseen events through its predictive analytics capabilities. By continuously monitoring global events and market trends, our platform provides early warnings and actionable insights to help businesses navigate through uncertainties and make informed decisions.

FRDM's software is versatile and applicable to a wide range of industries, including but not limited to manufacturing, retail, pharmaceuticals, automotive, electronics, and food & beverage. Regardless of the industry, our software provides invaluable support in navigating complex supply chain challenges.

FRDM is dedicated to providing excellent customer support. Our team of experts is available to address any inquiries, offer guidance, and assist with technical issues. You will have a dedicated account manager who understands your needs very well.

Certainly! We offer a free live demo, during which you can explore the features and functionalities of our software with one of our experts ready to answer any questions you may have. This allows you to experience firsthand how FRDM’s software can benefit your supply chain risk management efforts.

To request a demo, click here. One of our representatives will promptly get in touch to schedule a personalized demo tailored to your organization's specific needs.

FRDM stands out due to its advanced proprietary data collection, real-time monitoring capabilities, predictive analytics, and seamless integration with existing systems. Our user-friendly interface and personalized support further enhance the overall experience, making us a preferred choice for businesses seeking effective supply chain risk management solutions.

Many businesses have successfully implemented supply chain risk software and reaped the benefits. Here are a few case studies that highlight the effectiveness of such software in managing risks and improving supply chain performance:

Oshkosh is a global industrial technology company innovating purpose-built, mission critical equipment for everyday heroes around the world. The compliance team's main challenge revolved around the lack of visibility into the supply chain. Disruptions like natural disasters, port issues, and the impact of COVID-induced constraints were on the rise. When attempting to correlate their data with that of tier-one suppliers, the team recognized the critical need for enhanced visibility. 

Spend data was extracted from the Oshkosh system and integrated into FRDM. With their FRDM dashboard, the compliance team gained a level of visibility that was previously unavailable, allowing them to build unique paths forward. You can see the full case study here, or have it sent directly to your email.

The Australia Modern Slavery Act is a significant piece of legislation aimed at combating modern slavery and human trafficking within the country. Enacted in 2018, the Act requires businesses operating in Australia with an annual consolidated revenue of AUD $100 million or more to submit an annual Modern Slavery Statement. This statement outlines the actions taken by the company to address modern slavery risks in their operations and supply chains. The Act encourages transparency and accountability, compelling companies to assess and disclose any instances of modern slavery within their operations. By promoting responsible business practices and supply chain due diligence, the Australia Modern Slavery Act seeks to eliminate modern slavery and protect vulnerable workers, while also driving greater corporate awareness and responsibility to tackle this global issue.

• Annual Consolidated Revenue: The Act applies to entities with an annual consolidated revenue of AUD $100 million or more. This includes both private and public companies, trusts, and other entities operating in Australia.
• Operating in Australia: The Act applies to entities that conduct business or part of their business within Australia, regardless of whether they are based in Australia or overseas.
• Foreign Entities with Australian Presence: The Act also applies to foreign entities that have a connection to Australia, such as subsidiaries, branches, or offices operating in Australia, and meet the annual revenue threshold.

1. Modern Slavery Statement: Companies must prepare and submit an annual Modern Slavery Statement. This statement outlines the actions they have taken to address modern slavery risks in their operations and supply chains.
2. Due Diligence: Companies are expected to conduct due diligence on their operations and supply chains to identify and assess modern slavery risks. This includes understanding the potential risks of modern slavery in their supply chains and taking appropriate actions to address and mitigate those risks.
3. Risk Assessment: Companies should conduct risk assessments to identify areas within their operations and supply chains that are most vulnerable to modern slavery.
4. Reporting Requirements: The Modern Slavery Statement must be approved by the company's board of directors and signed by a director or a designated senior executive.
5. Transparency and Disclosure: Companies must publish their Modern Slavery Statement on a publicly accessible central register designated by the Australian government.
6. Continuous Improvement: The Act encourages companies to monitor and evaluate their efforts to address modern slavery and take steps towards continuous improvement.

The Act's primary focus is on transparency and reporting, requiring companies to submit a Modern Slavery Statement outlining the actions taken to address modern slavery risks in their operations and supply chains. Companies failing to meet the reporting requirements may be subject to reputational damage, as stakeholders, including consumers, investors, and business partners, increasingly prioritize ethical and responsible business practices.

In addition to reputational risks, companies that do not comply with the Act may face increased scrutiny from civil society organizations, which could lead to negative publicity and consumer backlash. Moreover, non-compliance may negatively impact business relationships, as business partners and clients may prefer to work with companies that demonstrate a commitment to combatting modern slavery and human trafficking.

While the Australia Modern Slavery Act does not impose direct financial penalties for non-compliance, companies should take the reporting requirements seriously to maintain their reputation, demonstrate corporate responsibility, and contribute to the broader efforts to combat modern slavery. The Act encourages a culture of transparency and accountability, emphasizing the importance of addressing modern slavery risks in supply chains and operations.