Technology & Innovation
Sustainability in SAP
A topic of increasing importance
Environmental protection and sustainability are becoming increasingly important in today’s competitive landscape. In the past, these issues were essential components of brand image, but they are now increasingly coming into focus due to new legislation. In June 2021, the new Due Diligence Act, known as the Supply Chain Act, was passed in the German parliament, presenting companies with new challenges. The Supply Chain Act is intended to create a legal framework to improve the protection of the environment, human rights and children’s rights along global supply chains. But how exactly can or must companies comply with the Supply Chain Act – after all, there are heavy fines for violations?
Even though the effects of the Supply Chain Act are far-reaching, there is no reason to panic. A study by the EU Commission has shown that the costs for large companies are only 0.009 percent of sales on average.
Key points of the new supply chain law
The German Federal Ministry of Labor and Social Affairs (BMAS) and the German Federal Ministry for Economic Cooperation and Development (BMZ) have presented a key issues paper for the new Supply Chain Act and the strengthening of corporate due diligence to prevent human rights violations in global value chains.
The envisaged obligations go far beyond the core elements of the National Action Plan and relevant international standards, such as the UN Guiding Principles on Business and Human Rights. This is unique because it is the first time German law has been applied to international supply chains. Thus, there is a move away from the principle of applicability of the “law at the place where the damage occurs” to the “law at the place of action”.
Is your company affected by the Supply Chain Act?
In principle, only large companies with more than 500 employees are directly affected by the new Supply Chain Act. This corresponds to approximately 7,200 companies in Germany (partnerships and corporations).
However, companies with fewer than 500 employees will also be indirectly affected, because supply chain monitoring takes place not only internationally but also nationally. In this respect, small companies may also be obliged to provide information and disclosures to their large trading partners.
For affected companies, this means committing themselves to the UN Guiding Principles on Business and Human Rights and Environmental Risks and also demanding these from all stakeholders (especially business partners).
All measures taken by the companies concerned must then also be published transparently in annual reports.
Our solution: Sco2pes® & Sco2res®
Meet the requirements of the Supply Chain Act with Sco2pes® and Sco2res®
The Supply Chain Act essentially requires systematic risk management and an electronic reporting obligation on the part of companies to a federal authority, which checks the information for plausibility on a random basis or in cases of suspicion. Existing reporting obligations, for example under the CSR Directive, are to be taken into account.
With Sco2pes® you can generate audit-proof CO₂ data based on the entire value creation process (Scope 1, Scope 2 and Scope 3) on the basis of valid financial data from your company’s procurement and accounting.
With Sco2res® you can monitor the sustainability of global supply chains in an automated and legally compliant manner and thus fulfill your documentation, monitoring and reporting obligations.
