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BUSINESS: 🌍 Supply Chain Law Enforcement: BAFA Launches First Major Investigation

Germany’s Federal Office for Economic Affairs and Export Control (BAFA) has launched a formal investigation into a large industrial firm over alleged human rights and environmental violations linked to its foreign suppliers. This marks one of the first high-profile enforcement actions under the Supply Chain Due Diligence Act (LkSG), in force since January 2023.

The LkSG requires companies to identify, prevent, and address risks across their global supply chains. BAFA is now reviewing whether the company had sufficient due diligence measures in place and responded appropriately to known risks.

Legal Commentary
This investigation signals BAFA’s intent to actively enforce the LkSG. Companies should treat compliance as more than a checkbox—risk analyses, preventive actions, and grievance procedures must be well-documented and responsive to actual conditions on the ground.

Violations can result in fines of up to 2% of global turnover and exclusion from public contracts. Firms operating in Germany should review and, if necessary, strengthen their supply chain compliance frameworks immediately.

(Source: Tagesschau / SWR)