Impact of the Act on Corporate Due Diligence in Supply Chains on the Role of Compliance Officers

To mark the International Anti-Corruption Day on 9 December, the Alliance for Integrity, the German Global Compact Network (DGCN), the German Institute for Compliance (DICO e.V.) and Transparency Deutschland held a knowledge sharing session on the impact of the Human Rights Due Diligence Act on the role of compliance officers.
In June 2021, the German government adopted the Act on Corporate Due Diligence in Supply Chains, for the first time requiring German enterprises to make reasonable efforts to ensure that there are no violations of human rights in their own business operations and in the supply chain.

With over 80 people in attendance, the virtual event featured remarks from the Heino von Meyer, Board Member at Transparency Deutschland, as well as guest speakers from civil society organizations and the private sector. Central to the discussion was an understanding of salient human rights issues where preventing risk to people is prioritized above risk to business, while recognizing that where risks to people’s human rights are greatest, there is strong convergence with risk to the business. Natura and Co.’s Oscar Muzilli (Procurement Manager) and Marco Barretto (Senior Compliance Manager) shared their risk evaluation framework and offered suggestions for the prevention of human rights and environmental violations in business.

Despite the best efforts of governments, regulators and companies, supply chain corruption remains an issue all over the world. The task of corporate compliance officers will therefore be to translate the new requirements into workable approaches that can also be implemented by suppliers and business partners worldwide. Attendees shared knowledge and experiences on linking approaches of anti-corruption to the new due diligence requirements, resulting in recommendations for companies interested in further developing the role of their compliance officers.

The Act on Corporate Due Diligence in Supply Chains will enter into force in 2023 to initially cover companies with 3,000 or more employees, and from 2024 onwards companies with 1,000 or more employees. These companies must identify risks of human rights violations and environmental destruction at direct suppliers and, if they gain "substantiated knowledge" of a potential abuse, also at indirect suppliers.

International Anti-Corruption Day is commemorated annually on 9 December in recognition of the United Nations Convention against Corruption which was signed in Mexico in 2003.

Author: Michael Etoh