Just before the entry into force of the German Act on Corporate Due Diligence Obligations for the Prevention of Human Rights Violations in Supply Chains [Gesetz über Lieferkettensorgfaltspflichten, LkSG] and following the recently published handout on risk analysis, the German Federal Office for Economic Affairs and Export Control [Bundesamt für Wirtschaft und Ausfuhrkontrolle, BAFA] has now published a comprehensive questionnaire. Affected companies can meet their reporting obligations under Sec. 10 (2) LkSG with such questionnaire.

The plan is to make an online input form based on these questions available to companies as of the spring of 2023. As things currently stand, the use of this online input form will not be mandatory. Alternatively, it will therefore still be possible for companies to submit individual reports to the BAFA.

According to the LkSG, companies must submit their report to the BAFA no later than four months after the end of the previous business year and make it available on their own website for seven years. This does not affect the obligation to maintain ongoing internal documentation in connection with due diligence obligations along the supply chains.

Scope and content of the questionnaire

Several of the questions are mandatory under the LkSG, while others are voluntary and include both multiple-choice options and free-text fields. The latter can be used to present and explain individual processes or other company-specific peculiarities.

a) Master data

First of all, the particular organisation must enter its master data and information. It must also enter a responsible contact person in the event of any queries. Additionally, voluntary information on the corporate structure and procurement structure can be provided.

b) Compliance management structures, prevention and remediation measures

This is followed by comprehensive reporting obligations regarding the specific corporate and compliance management structures. Particularly relevant are the topics: strategy and analysis as well as preventive and reactive measures in the event of environmental and human rights issues within the company and along the supply chains.

The questionnaire subsequently contains questions about risk exposure, the handling of identified violations, and remediation measures. These are each divided into information regarding the company's own business area as well as its direct and indirect suppliers. Particular focus is placed on risk analysis and preventive measures. In this connection the questionnaire also asks how LkSG-relevant topics and findings are communicated within the company.

c) Complaints management

Finally, questions are asked on the existence and qualitative form of internal complaints procedures, as well as access thereto. The questionnaire concludes with a self-assessment by the company of its own risk management over the past business year and an evaluation of its own measures.

Remarks on the questionnaire

The questionnaire also provides a rough guide to dealing with the reporting obligation. For example, the BAFA clarifies that not only group parent companies, but also subsidiaries falling within the scope of the LkSG, must submit and publish their own reports. At the same time, the BAFA provides guidance on the extent to which text passages from other reports may be adopted or referred to in case of a group of companies.

Besides the actual reporting obligation, the report based on the questionnaire will also play a decisive role in the context of checks made by the BAFA. The number of random checks conducted by the BAFA is based on the credibility of the submitted responses. For example, voluntary disclosures by companies can have a beneficial effect in that, in the case of risk-based checks, the BAFA will only conduct an abridged examination. The numerous free-text fields are also intended to provide companies with an opportunity to present information and processes in detail, which BAFA says will be appropriately acknowledged. In particular, companies will be able to use a free-text field to provide more detailed information in case an unequivocal "yes" or "no" answer.

What needs to be done?

The BAFA's questionnaires clearly shows where the journey is headed: by ensuring the highest possible degree of automation, the BAFA wishes to avoid having to deal with a large number of differently structured reports under Sec. 10 (2) LkSG.

Nevertheless, each company should carefully consider whether it uses the online questionnaire for reporting, for it is also possible that the company will incriminate itself in the questionnaire and thus expose itself to the risk of a fine. Here, instead of possibly just giving abridged answers, in problematic cases companies should consider reporting individually, in particular in the context of a detailed individual examination.

Addressees of the LkSG should therefore give their prompt attention to the requirements arising from the questionnaire.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.