The German Supply Chain Due Diligence Act requires companies to meet due diligence obligations relating to human rights and environmental protection. Companies in Germany to which the LkSG applies must meet specific requirements. These include carrying out a risk analysis and establishing a complaints procedure. A suitable complaints channel can, for example, be implemented using an online questionnaire or form provided on the company’s own website. The following sections explain which companies are affected by the Act, which measures companies are required to implement and how a complaints procedure can be set up. We also provide free questionnaires that companies can use as part of their risk and complaints management under the LkSG.
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Which companies are affected by the LkSG?
The German Supply Chain Due Diligence Act has applied since 2023 to all German companies with at least 3,000 employees, and since January 2024 to all companies with at least 1,000 employees. The LkSG also applies to foreign companies with subsidiaries in Germany. In addition to large companies, smaller and medium-sized German companies can also be affected because they are often direct suppliers to companies that are directly subject to the Act. In such cases, SMEs are considered “direct suppliers” of the obligated company and may be included in its risk analysis and complaints procedure. In other words, although the LkSG is not directed at small and medium-sized companies, it does provide for obligated companies to work with SME suppliers and service providers in line with the requirements of the Act. Companies subject to the LkSG can therefore be expected to involve smaller business partners in implementing due diligence measures. Because supply chains are closely interconnected, SMEs below the statutory thresholds may also be affected.
What can SMEs expect under the Supply Chain Act?
SMEs that act as business partners of companies subject to the LkSG may be asked to cooperate with them in relation to the Act. As part of their risk analysis, obligated companies may therefore request relevant information from SMEs. Supplier reviews can, for example, be carried out using supplier self-assessments or on-site audits. SMEs may also be asked to participate in preventive and remedial measures. In addition, obligated companies may involve SMEs in their complaints management. Suppliers and service providers should therefore expect that they may be asked to cooperate and may receive questionnaires or codes of conduct to complete or sign.
Conclusion: SMEs are not themselves subject to the statutory due diligence obligations of the Supply Chain Act, but they may still encounter requirements arising from the Act if they are suppliers or service providers to companies that are directly affected. Obligated companies may place requirements on SMEs as part of their risk management.
The German Federal Office for Economic Affairs and Export Control (BAFA) provides more detailed information for SMEs. Its FAQ covering the most important questions and answers for SMEs is available here: BAFA FAQ for SMEs on cooperation in supply chains.
Supply Chain Act: requirements for companies
In principle, the Supply Chain Act requires companies to respect human rights throughout their supply chains and to meet the corresponding due diligence obligations. These obligations relate to all products and services of the companies concerned across the entire supply chain. Companies in Germany to which the Act applies must meet specific requirements. They must first appoint a responsible person, such as a human rights officer, to oversee compliance with the Act. They must also carry out a risk analysis, meaning that risks in the supply chain must be identified, analysed, assessed and prioritised. On the basis of this risk management process, the company must issue a policy statement declaring its public commitment to respecting human rights. The policy statement must also explain how the company intends to fulfil this responsibility.
Companies must also take measures under the LkSG to prevent human rights violations and to stop violations that have already occurred. Risks along the supply chain must therefore be reduced through preventive measures and/or addressed through remedial action. The effectiveness of these measures must then be reviewed regularly.
Another key element of the Supply Chain Act is the establishment of one or more complaints procedures for people affected within the supply chain. A complaints channel is intended to allow affected people to report human rights violations and breaches of environmental obligations. Possible low-threshold channels include a hotline or an online form integrated into the company’s website. Under the LkSG, the complaints procedure must allow both internal and external persons to submit reports and complaints.
The legal framework for human rights due diligence also requires companies to document and report on their supply chain management. Detailed information and the questionnaire for companies subject to reporting obligations are available from the German Federal Office for Economic Affairs and Export Control: BAFA: reporting obligations under the Supply Chain Act.
Overview of due diligence obligations under the LkSG:
- Appoint a responsible person
Define responsibility for the LkSG within the company - Establish risk management
Carry out a risk analysis: identify, assess and prioritise risks in the supply chain - Publish a policy statement
Issue a policy statement based on the risk analysis - Take action
Introduce measures to preventively reduce potential risks and remedy existing risks - Set up a complaints channel
Implement a complaints procedure for people in the supply chains - Meet documentation and reporting obligations
Maintain ongoing documentation and report annually on supply chain management
Companies must be able to demonstrate that they have made appropriate efforts to implement the LkSG. Breaches of the German Supply Chain Due Diligence Act can result in fines, and companies may also be excluded from public procurement procedures. The competent supervisory authority is the German Federal Office for Economic Affairs and Export Control.
LkSG: complaints procedures using an online questionnaire
A complaints procedure is one of the core due diligence requirements that companies must establish under the LkSG. Such a procedure is intended to enable confidential reporting of human rights and environmental violations. Companies must therefore establish a reporting system through which internal and external persons can provide information about human rights or environmental risks along the supply chain. Under Section 8(4) LkSG, the complaints procedure must be accessible to potential users, protect the confidentiality of their identity and provide effective protection against disadvantage or punishment resulting from a complaint.
The Act does not define the confidentiality requirement in greater detail, but it can be assumed that it may be interpreted with reference to the German Whistleblower Protection Act (HinSchG). Against this background, an online form integrated into the company website is particularly suitable as a complaints channel. Unlike hotline or email-based solutions, where unauthorised persons may potentially gain access to incoming phone numbers or email addresses, online forms can be configured to preserve confidentiality. This requires access to submitted reports to be restricted to authorised persons, such as the human rights officer. For online forms created with LamaPoll, the necessary permissions can be assigned using the user and rights management in the account.
When creating an online questionnaire for risk and/or complaints management, you can use our free form templates as a guide. They can be embedded easily on your own website. For risk management, for example, you can use the supplier self-disclosure template. For complaints management, you can use the online form as a reporting channel. The form, which takes account of the requirements of the German Whistleblower Protection Act, can also be adapted for use as an LkSG complaints form. All questionnaire templates can be copied to your own LamaPoll account with one click and adjusted there as required.
The German Supply Chain Due Diligence Act requires the complaints procedure to be reviewed for effectiveness at least once a year and, where appropriate, on an event-driven basis.
The German Federal Ministry of Labour and Social Affairs provides detailed guidance for companies on organising, implementing and evaluating a complaints procedure: Guidance on complaints procedures
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