Webinar: Germany’s New Law On Corporate Supply Chain Due Diligence

YouTube transcript (to make it easy to search)

hello everyone and thanks for joining this webinar hosted by the making Club today's session will be focused on a
very important topic the German supply chain due diligence act my name is Clements Aaron and I'm program director
at the making club today we also welcome two amazing guest speakers Dr York Smith
who's senior corporate responsibility professional yoga's work for consulting firms and business schools in research
Consulting and training will be focused on responsible Supply Chain management and we also welcome Catherine hubby
who's senior manager for human rights at Aldi South group she is currently responsible for implementing Aldi's
human rights due to designs framework and we also have Matt Friedman who's a CEO and founder of the meacon club
we have around 200 people who register for this webinar and we're extremely happy to welcome you all
just a reminder that you can submit any questions that you might have in the chat function and we'll have some time
at the end of the session for question and answer so any question that you may have submit them in the chat function
and we'll spend some time at the end of the session other couples of rules of housekeeping
please keep yourself on mute and ensure that your camera is off this webinar is hosted by the making
club we are a membership based non-profit organization based in Hong Kong and we work with the private sector
in a positive and collaborative way to address modern slavery we work with major multinational Brands spanning
across Financial Services Hospitality retail Manufacturing Technologies and
what we do is that we facilitate working groups and discussion sessions we develop tools and solutions to address
the fundamental drivers of modern slavery and we act as trusted advisor to
companies that are seeking to develop and Implement their anti-series strategy
So today we're here to talk about a very important developments the German
government passed a new low to ensure that German company will be responsible
for the impact on human rights and environment in their supply chains so this is the German supply chain due
diligence act or lksg and it just entered into Force this year in January
2023 it requires companies to large companies to set a management system
to identify prevent and mitigate human rights and environmental impacts within
their own operations and within their direct suppliers on operations
so you might wonder what are the implications for my business so this is
what we're going to talk about today so first I will give an introduction to Modern
slavery and human rights due diligence then Europe will give some information
on how to implement the German supply chain due diligence acts what are the
requirements for businesses and what are the steps that companies can take to comply
then we'll have some best practices shared by Catherine from Aldi she will
introduce oh how Aldi is approaching human rights and what they do in the supply chains and finally at the end of
the session we'll have some time to address your questions
so to begin with I would like to talk about modern slavery and Supply chains
it is estimated that nearly 50 50 million people globally are in situation
of modern slavery when we refer to Modern slavery we're talking about any
kind of situation whereby someone is forced to work against their will so there are 50 million people in this
situation and this number has increased by 25 percent over the past five years there are 22 million people in first
marriage and 28 million people that are enforced labor and a significant
proportion of these victims work in Global Supply chains the way Supply
chains are structured creates vulnerability to Modern slavery and why
is that because companies attempt to compete they are often Under Pressure to
keep their prediction low as low their production costs sorry as low as possible
so they work with manufacturing companies in locations where the labor rates are low and in some cases what is
happening is that and scrupulous actors in the supply chain exploit workers to gain the highest profits and this is
happening in locations where the labor standards are low or unregulated or even
non-existent this is happening quite often without the knowledge of buyers or Brands and
retailers modern slavery in supply chain can includes their bondage physical and
sexual violence threats against employees and their families which we're holding restriction of movement and
retention of personal documents such as passports for instance
as a result of these practices it's possible for modern slavery to infiltrate the supply chains of many of
our everyday products the clothes that we wear the food that we eat the electronic devices that we use
companies in order to address those risks usually use social audits
to assess whether or not there are signs of modern slavery in a manufacturing or
in a processing facility the thing is that Supply chains are very complicated and involve many levels so it can be
very difficult to trace where whether or not there's modern slavery
so what is it that company can do to make sure that they can address those issues in a proactive and efficient way
while companies can conduct human rights due diligence human rights due diligence is a concept
that was initiated by the UN guiding principles on business and human rights
and by the oecd guidelines for Multinational Enterprises those guidelines
have introduced this concept which means that companies should Implement system
to make sure that they can identify prevent and mitigate human rights risks
and he has six principles the first one is that companies should have policies
and procedures to make sure that their commitments to respect human rights or to address modern slavery is integrated
into their policies and into their management system the second one is that it's very
important is to conduct risk assessments and to know your supply chain so by
better understand understanding where there is risk companies will better
understand how they can act the third one is to use the information
that has been collected in order to take action to either prevent risks or
address the risk and mitigate when there is harm then companies should track the
implementation of their program see what works and what doesn't work
and a very important step is to communicate and report on progress
to show and to do it publicly to show what has been done to address impacts on
human rights and finally companies should provide remedy to write
Elders in producing countries so those guidelines they are in line with legislation
with transparency legislation human rights due diligence legislation
and modernously reacts because they have been built upon the ungps and the osv
guidelines and for the past decades companies have
been encouraged through guidelines such as ungp's audio ACD guidelines to take
actions to be proactive and to look at the risk in the supply chain and to put
policies and procedures and systems in place to make sure that they can identify and address those risks but it
seems that voluntary approaches are not enough and that is why governments are
taking actions on the legal level so there have been a series of transparency legislations human rights due diligence
legislations modern slavery Acts and today we will focus on what what's
happening in Germany and the German supply chain due diligence Acts
so York I'll hand it over to you so we'll to
introduce the requirements of the new low and practical steps for businesses to
comply with the new law thank you very much you're over to you
thank you Clements my first question can you hear me because we had some issues with the
mic elements is that yeah we can hear you okay that's great
yes so welcome everybody welcome from ausley Switzerland
so this part of our webinar is maybe the more technical part
I would like to get into a few aspects of the new law
that probably many of you already know maybe most of you already know but have a good introduction and a
good basis for the discussions that we're going to have later on and the
presentation from the Practical side so what I would like to do is
generally have a few General words about the ACT
the law and then look at a few more critical due diligence elements
in especially and then also have a
little bit of the relations and an Outlook in the landscape of laws and
regulations that have come up and that are coming up in
yeah the the human rights area
so when we look at the background of this law
we had from 2016 onwards the national
action plan on business and human rights in Germany this was monitored and there were a
few studies and yeah it became clear that maybe this
very free and and not very strict regulation or implementation of the business and
human rights guiding principles were not enough for the German companies to really
have something in place that that make sure that the risks in
Supply chains are basically reduced so in 2021
the new law was adopted there was also a competent Authority
identified or basically authorized to to look into this law from various
perspectives so the federal office for economic Affairs and Export control Buddhism
is responsible for various issues connected to the law so information but
also checking companies for compliance with reporting obligations which are
very important the inspectations and also preventions of violations but also
sanctions and fines that are connected with the law
the first thing that is certainly interesting and this is also probably the reason why we are
all here who is that actually for so from and as Clemens has
already mentioned from the first of January this year large companies with more than 3 000
employees in Germany are actually required to comply
from next year on so the first of January 2024
smaller companies with more than 1 000 employees will also be eligible and then
we might ask what is about the smaller companies because they are also mentioned in the National Action Plan
there it goes to companies with more than 500 employees of
course there is also a connection to them and this is why it becomes so
important also for small and medium-sized companies through the supply chains because of
course through the due diligence process companies larger companies have to check
through their supply chains and see how also the smaller companies that are
part of those Supply chains comply with the obligations
then the legal provisions and positions
and definitions of the law are also described so the basic element of course are
human rights risks and violations so here the law specifically relates to
the various conventions and Covenants in the international landscape of
regulations and laws concerning human human rights
relating to Modern slavery the law does not mention the term modern slavery but
speaks about all forms of slavery and also mentions human trafficking here at
this point where the arrow ends this is related to to child labor and
children in general but at a a later part in the law it
also relates to adults or human beings in general there is also an environmental related
risk and violations component which is basically related to
environmental aspects that have some connection to hazardous
substances and so or also connected to human rights when it comes to health risks
and the law of course and and that's maybe also connected to
the various other regulations that you've already seen on one of the slides of Clements
that it not only addresses the own business area of the companies but
of course the supply chains and this means direct but in a limited way
also indirect suppliers so the various elements
which are described in the law in the due diligence procedure is the
establishment of a risk management system there need to be a in-house responsibility so somebody needs to be
assigned to be responsible for the implementation of the law and its
obligations in the company the basic element is
the risk analysis which has to be made on a regular basis
but also connected to new or to changes in the business
processes there is the necessity of the issuing
of a policy statement we need the establishment of preventive measures
for the own business unit but also for direct suppliers so the ones that the company has
also contractual connections to and then we have the taking of
corrective or remedial action the establishment of a compliance procedure
a grievance mechanism or even system and then the implementation of due
diligence connected to indirect suppliers so along the supply chains also their companies have to be
yeah need to do something and then finally of course a documentation and a reporting
element where the companies have to basically
yeah tell in writing that they fulfill with all the obligations
so the the basis of the law of course is a
risk-based approach so when we are talking about risk here we are meaning that yeah we're meeting the risk of
of full rights holders so that's the UN language for the people who might be affected
by activities of a company in the supply chain
or let's take the entire value chain and this means the employees in the
company itself and all the employees along the various business partners in the supply chain
so we see that there are the different components but the overall
aim of course is to identify as much as possible and prevent as
much as possible or at least minimize the risks and also identify and end
yeah manifested risks so when the risks the probabilities that
something happens to Rice rights holders has already manifested so then we
are speaking about a violation of such a human right
the various elements are connected but we see that a lot of these connections are related to the risk
analysis which is sort of the core element within the risk management system
maybe a little bit of a different or difficult wording here is appropriate
and effective matches that have to be implemented by the company so what is appropriate and what is effective
so there is a an explanation of these terms also
in a separate document where we learn that this means
the the better I can actually
identify the various risks in the supply chain if this is possible by the means
the measures that I use then they are effective
of course that depends on the company's business activities it might be
quite a difference between a retail company or a bank
what risks should be included
it needs to be proactive so the earlier the better in all
relevant business processes and supply chain and I said before there needs to be somebody who is actually
in charge of doing everything that is connected to the
legal obligations of the law so yeah
our company is actually prepared already and this is something that where we
where we have some some data from surveys so this is the newer one
which was connected among the members of the German Association for materials management purchasing and
Logistics but the overdraft feinkov and logistic in German
so we see that or that is the outcome of that report
which was a lot in the press in the last weeks so about four percent
of companies of those member companies consider themselves well prepared
but even 70 percent still consider themselves moderately or until very
poorly paid 28 have a system for risk identification
in place 50 are in a preparation and there is also
still yeah a large number of more than 50
percent of companies only have a partial knowledge of their direct suppliers
so still a lot to do and I think that's also a reason why many of you have joined today
so let's look at some of the critical elements of what companies have to do to
be a little bit better prepared so when we look at one of the first elements which is the policy statement then here
we see we need to include a human rights strategy
we need to prioritize in that document based on the risk analysis
the the most important risks that are connected to
or where our business Community where our business activities are connected to Human Rights and environment related
risks we need to describe in that
in that document the risk management measures that we have actually
adopted or that we plan to adopt and one thing which is quite
important also is the expectations that we have from employees and
suppliers so it must be clear also and it must be documented in that
statement for all the yeah suppliers what the
expectations of from from our side as as a buying
company are and of course such documents need to be implemented and need to be adopted by
Senior Management the risk analysis is the major part the central element and point of
references of the risk management system here we do that would be then
document in in the in the statement the identification and prioritization
process of the risks in our own business area and connected to direct suppliers
this has to be done annually but if there are changes in
the value chain so if we have new products or if we have new processes added to what we are doing as a
company then we also need to specifically make a new risk analysis
and of course results of that need to be communicated within the company preventive
measures are then based on those risk analysis
so we need to look at the identified risks and
yeah use appropriate measures to make sure that these risk risks
are not manifesting into actual violations so this means for our own business
processes the human rights strategy implementation process so how are we
going to go from strategy to actual implementation
procurement principles certainly then training of our own people that are
related to that process and certainly also a control mechanism and similar to
to that what we're doing within our own business area there is also something that we need to do with or
in connection with direct suppliers as said before clear expectations
also enshrine this into the the contractual the contracts that that exist
also provide training and control whether this has actually
been implemented the remedy aspect is then the next
one also here it reflects or refers to the results of the risk analysis
again identified violations need to be addressed in this context
and appropriate measures need to be taken to make sure that these are sort of ended or
minimized as soon as possible to make sure that
we get information from maybe also affected individuals
we have a complaint procedure included a grievance mechanism or a grievance system
where all potentially affected people
also third parties but also everybody who is connected
with the yeah relations of the business relations to the supply to the
suppliers there is a complaint procedure in place so
everybody can actually give information about whether there is there might be
a problem there might be risks there might even be already violations taking place
and then the final part is the documentation and Reporting process
which will then be maybe yeah coming into more interest in the
next year when many of things these things have to be documented
so why actually bother of course we have
risks and opportunities that are connected to laws
that are somehow yeah in a Nexus between compliance and corporate responsibility
and we're when we're talking about risk here we certainly also mean risk for the company from non-compliance or
ill-compliance with regulations there are administrative fines
included but no civil litigation process is foreseen in the law itself that has
been criticized by by interest groups but that's the way it is now
but of course there is also maybe a problem of reputation loss and specifically
the public procurement issue is also yeah included in the law as one of
the sections that companies that do not comply might lose
their possibility to yeah be used for for public tenders
compliance of course gives yeah
a a a good element of of compliance in general and a good reputation hopefully
but it also leads to a better understanding of Supply chains and as we have seen from the results of that
study that I mentioned or the server that I mentioned before it might be a good idea especially
today in in times of disrupting Supply chains it might be a good idea to better
understand supply chains and better understand from whom you're actually sourcing
better meeting of consumer expectations of pools and I hope that Catherine will will mention that later
on consumer expectations about the responsibility of
companies also connected to to force labor or modern slavery
and also synergies with various obligations in yeah the the growing landscape of
laws and regulations nationally but also internationally or
supernationally so here we have some of the upcoming laws in the EU
we have the non-financial reporting directive already which also requires reporting about human rights performance
this will probably be a little bit stricter with the
corporate sustainability reporting directive which is now in The Proposal phase in the political process here
especially also companies that are smaller are included we have various
laws on on the national level that also require policy statements or supply
chain risk assessment and reporting of Human Rights aspects and we have
also the necessity of yeah an efficient integration of appropriate and
effective measures in compliance and Corporal responsibility
that yeah become more and more important I think for companies
and I think it's a good idea also to combine the Necessities that or the
requirements that the the different laws have because I think there can be a lot of
synergies in the process of yeah complying with these regulations and and the obligations that they
have for companies so this would be the short introduction that I would like to
give and I give back to lemons I think
thank you very much yogurt for this presentation it was really insightful and we already have a lot of questions
from the audience so we will address them at the end of the session I would like to give the floor to
Catherine now we'll talk about Aldi's approach to human rights to diligence
caffeine over to you yeah thanks a lot and hello also from my
side before I start to talk about our work with regards to Human Rights due
diligence let me just give you a very brief introduction to the ID South group our company has been founded in Germany
in 1913 since the 60s we are a discount retailer and by now we have over 7 000
stores in 11 countries and over 200 000 people are working for us our International CR office where I'm
based is in Austria and next to our team which by now has over 100 people working
on CR we also have a CR team in each of our markets as well as CR teams in
Bangladesh and also in Hong Kong and those teams are supply chain experts responsible for conducting our own ID
sustainability Audits and I think in total we have about 230 people working
on cr4 ID moving on to Human Rights due diligence
I would like to talk about our best practices what has been working well for
us as ID and also about some of the gaps that we identified in our due diligence framework with regards to the German
supply chain due diligence Act let's start with governance and if
there is one message that you take away from my presentation today please
be make sure that this is it it is this make sure that sustainability is
everybody's business because it is important that all your
colleagues understand that human rights are non-negotiable that they need to be respected and that
they should be promoted across your business and they need to understand that
sustainability needs to be embedded into the core of your company that it is embedded in all processes and that is
really key because sustainability is not something or should not be something that the Seattle department is working
on in its bubble but everybody needs to consider sustainability in every part of
their daily business life and that is what you should move towards to in your company
I'm not saying that we are there yet at ID but we have seen a huge shift in
the last 15 years that we have been working on CR at first it was this attitude of some colleagues okay this is
not my business and then people slowly started to accept that some kind of information
about CR might be interesting or even helpful and the next step was that we started
cooperating more and more and our colleagues understood that they our colleagues from other departments
understood that they need to implement what we develop because I can write
about responsible purchasing practices but I never purchase anything so I'm not
the one having a direct impact on our supply chains so over the last couple of years we more
and more started to develop Concepts together and started doing for example
meetings with business partners together so that we could send a join CR and buying message
and what we're currently doing is that we increasingly give responsibility to
colleagues in other departments to create this sense of ownership for human rights
we as the CR Department we provide the expert knowledge and we give feedback
but our colleagues are in the driver seat what does it mean for example they develop their own sustainability
strategies or on a smaller smaller scale they have this red flag CR questions
that buyers use when doing their first contact with potential new business
partners so they can already filter if this business partner might
fulfill our CR requirements and I'm not saying that all colleagues are super enthusiastic about it but
yeah I would say that we are getting there what we're doing in light of the German
legislation is that we currently develop a series of trainings that are mandatory
for all colleagues somehow involved in buying to ensure that really everybody has some background knowledge on for
example human and environmental rights and also on responsible purchasing
practices and going forward these trainings will be mandatory for all new
employees so people will have their IST onboarding training their compliance onboarding training and then also for
human rights and responsible purchasing practices it is also important that there is
support from the top management of the company and I think this is something that we at
ID are already doing very well the MD of our International CR Department reports
to the CEO so we can really place our messages and receive feedback directly
from the top management we also participate in a new buying conferences for our high-risk products
and during which we yeah give regular CR updates and we also participate in a
number of other buying meetings on different hierarchy levels additionally we have different
committees in place in which the human rights experts from each country take
part so that oh no
sorry I lost my train of thought so these human rights experts from every country have decision power and they
also directly report to the top Management in their countries so this also enables us to take decisions
quickly I mean relatively quickly because we are still a big company but
yeah that works very well so my second best practice for you would be to
ensure that the top management is involved in your CR work
then New York mentioned the importance of proper risk analysis and I
definitely would second that unless you accompany that sells one type of product
and buys directly from only I don't know two companies really invest the
resources into proper risk analysis and into impact assessments because if you
do not know where you risk slaves play be it with certain business partner or
in a certain country sourcing a specific product and if you also do not know
where you have levers you cannot set up a due diligence system that really enables you to have the most impact that
you can have and nobody has unlimited resources so you should really ensure that you use
them wisely fashion you should ask yourself
join your risk analysis is like what data do you already have in your company
from whom could you get the data that you're missing and is there data that you simply cannot get
and also should you do one risk analysis or several
what we found really helpful is to work with external service providers that
have specific knowledge and that are experts in certain areas because we
found that we do not get that kind of in-depth data if we do only one
overarching risk analysis what we are doing is that we are looking at our risks on three different levels
firstly we do risk analysis in the deeper supply chain to understand our
risk commodity groups and also resources then we do one concerning our own
operations to understand our risk processes and one also for our Direct
business partners to understand our risk Partners so at the end of doing these
risk analysis we have a holistic view of risks and then afterwards we do impact
assessments to allow us a deep dive into certain topics where we think we need to know more about what our impact actually
is underground and this approach might not be the best for your company but my third best
practice definitely is conduct proper analysis and impact assessments
sorry as we do not have a lot of time to die I just provide you with some
glimpses into what we are doing with regards to prevention mitigation and Remediation
first of all we have been implementing a CR supplier variation for
about six years now and successively rolling out that program to all our high-risk commodity groups we have an
annual evaluation cycle and we first always ask our suppliers to fill out an
extensive self-assessment questionnaire and to upload documents like policies
and if I talk about suppliers I do not mean factories because we
normally in the most cases do not buy from factories directly but through importers so that's if I talk about
suppliers that are our importers in this annual Circle
cycle we then do early sustainability assessments together with our suppliers
at their production size or the production site they're using for ID and this can be either Farm or factory
these assessments are done by an external auditor but always together with our own ID staff
we want to get the production side doing this assessments but we also very much focus on our business partners to
understand what kind of monitoring setup they have if their staff is well educated with regards to CR and also how
the cooperation is between our suppliers and the management of the production side if the relationship is based on
trust if they know each other well and these kind of issues additionally we also sometimes Shadow
orders of our business partners just to just observing
if audits are done if they do their own orders according to ID standard
in all these activities are done to verify the information that was provided
to us at the beginning of the year and based on that information we put
together an evaluation at the end of the year and a grading for each of the suppliers and we also provide them with
an improvement plan according to the gaps that we see so what are aspects of this program
that work well and also could be used as a best practice for us
so my fourth best practice is that we are moving more and more towards a collaborative approach with our business
partners what does it mean well we if we see
things are not going well throughout the year we pick up the phone and call to understand what is going on and
also suppliers have become more and more proactive and let us know if their issues in the factory and we try to find
a solution together additionally if somebody has been doing a great job for several years in a row
and we know the scr stuff well then we don't do so many ideas so sustainability
assessments and their production sites anymore because we know that these suppliers go regularly into factories
and do great audits so they and also we can use our resources better than to go
in there with an additional audit we also provide suggestions on how to
complete corrective action plans and on trainings that we feel would be
beneficial and we also learned to be as transparent as possible and for example with regards
to the kpis of the evaluation and also regularly invite suppliers to give
feedback on concept on trainings that we develop because I mean I don't want to
develop a training that nobody finds helpful so I prefer that people like yeah give me feedback if we find if they
find that we could develop we could adapt to training somehow
next slide please my fifth bag with best practice actually
brings me back to my first one and making sure that the sustainability is everybody's business
what we do is that we communicate the evaluation results jointly with our buying department and suppliers who
constantly do not perform well in the area of CR and do not show any
Improvement will be delisted for early business in the long run and we do not take that decision lightly only if
there's really no improvement and no willingness we are not there yet that we have a
joint scorecard with buying quality and CR criteria but are already sending that
very strong message message together that like CR impacts buying decisions
and I think this joint scorecard is something we are moving towards
then my sixth practice if we talk about positive or negative impact that
we as already have we need to talk about the way we buy because we can develop
the nicest CR programs and these can make some change but not as much as
buying responsibly can so what we are doing increasingly is that we work together with our
colleagues in buying on different approaches to buying to discuss how we can buy differently and that starts with
groundwork of joint CR and buying trips to sourcing countries we do extensive supply chain mapping and
then there are discussions about lead time strategic long-term Partnerships with our diet business partners but also
with production sites and the discussions about cost of sustainable
production and in some of the discussions we also include business
partners into joint workshops and we are currently piloting this for example in our banana and textile supply chain
so my advice if you look at impact really look at your buying practices
next to our CR supplier evaluation we also developed policies and guidance
papers for almost selling risks for example child labor and forced labor
and the guidance papers provide Hands-On advice for all business partners and what to do in the supply
chain to prevent these issues from happening and also what to do in case something still happens
for child labor we also have a remediation process in place with a strategic partner that supports us on
the ground and we also developed in e-learning for our business partners my lessons learned from working on our
selling with or yeah maybe a best practice going forward don't try to
reinvent the wheel because in the past we have the tendency to develop our own e-learnings and guidance papers and I
mean that was not very efficient because there are a lot of great resources
already out there that were developed by multi-stakeholder initiatives or also by organizations like the mecom club so I
would suggest that you really use the existing resources out there
in the context of the German supply chain act we partner with the German Business Association that develops
trainings for our business partners and we suggested this approach because this
way we can prevent that each retail in Germany now develops very similar trainings and that our suppliers that
need to participate in several webinars with the very same context because also this is not efficient
so not only with regards to trainings does it make sense to partner with
others and this brings me to my eighth best practice a lot of selling was found in Supply
chains can only be truly tackled through systematic change in industry for
example when we talk about higher wages or establishing women's mechanisms thus I would always advise you to see if
it makes sense to partner with others be it with other companies bilaterally that
already yeah have certain certain projects set up in
Supply chains on the or in the factories that you're sourcing from or also in the
context of multi-stakeholder initiatives
Jurg said earlier that a lot of companies are not feeling very well
prepared for the law and I can totally understand that because even ID with our
huge CR team still has work to do some of the gaps that we identified are for
example the way we currently communicate we communicate quite a lot about our CR
world but we do not systematically publish findings from our supply chains
and we have a lot of data that we haven't really used and that
we haven't published additionally we have not really done
systematic Effectiveness reviews of all our Concepts tools and programs
we reviewed things but we need this to be part of every measure already from
the planning phase onwards with the formulation of smart kpis and we are
currently developing a concept for that and really want to make sure that all colleagues know how to develop these
kind of kpis we also want to become more
systematic regarding our work with stakeholders going forward we want to
ensure that we ask ourselves from the beginning of each project who should be included at what stage of the process
who can maybe give us feedback on a concept that we develop and who is a
partner in our sourcing country on the ground and yeah for example who can help
us to include the voice of workers and we already work with great Partners
but we can definitely also do this in a more systematic way
next slide please to come to an end I would like to add just two more things
depending on where you are with regards to setting up a due diligence framework in line with the German legislation the
task had might seem tremendous however I think that this legislation is
actually a step in the right direction as an impact-oriented and mandatory human rights to diligence legislation
creates a Level Playing Field for all companies and I believe it can really Foster change in Supply chains and this
will even be more so the case with the upcoming Au legislation additionally I'm convinced that success
of a business is only possible in the long run if human rights are recognized and protected and this is why please
remember sustainability should be everybody's business thank you
thank you so much Catherine for a presentation I think yeah you mentioned something really important
that sustainability should be everyone's business and it's really important to collaborate internally within the
companies to make sure that everyone every department is involved and take part of the process but also with
external stakeholders thank you for this insightful presentation so we have a few
minutes left for questions
if you don't have time to answer all of them we can do it in emails
but I will start with a question on the suppliers to York
I mean actually there are two questions that we can combine what is the
difference between direct and indirect suppliers according to the low and how
far should a company money for monitor their supply chain tier one two three
yes that's that's very clearly defined so direct suppliers is is everybody
who provides material for a company for their products and services
and where they have a contract too so when there is a contract between
the company and its supplier then it's it's a direct one and otherwise
it's it's an indirect one according to the law you only need to look directly to
your direct suppliers the indirect suppliers however are included in various ways so one way
is the grievance mechanism and this also brings us to one of the questions about
the the the rights holders that are not mentioned individually in the
law so so basically everybody should have the possibility
to make complaints and and that's the reason why the
grievance mechanism should be accessible for everybody who is somehow
connected to the company but the the monitoring process the
direct monitoring process is only for tier one but as kotlin has also said
you can also include the indirect suppliers by having
yeah some passages in your contract that the company your direct supplier is
sort of somehow required to also have Management Systems in place
that connect to your own requirements to the school
come on your mute
sorry thank you thank you you're for for your answer there's another question on
right holders what about the communities that could
be impacted by the the company's business suppliers
yes that's what I said everybody should have information
and the possibility to access the grievance system so
everybody who feels that they are affected by something that is happening
through the company's activities should have access to that and should be able to make a complaint
thank you there's another question on grace period is there any grace period
for a company that may not have the management system required in place at this moment
yeah as I've seen Winston hello nice to see you in the audience the world is small
yes to your question there is not a Grace period anymore
because everybody should now be able to to to do what is required the question is when is it actually
checked so the the competent Authority now can basically
check check whether the responsibility what the companies are or
complying to these requirements but it's it's it's not that there
is an additional period to yeah to to not do anything
at the same time I mean the reporting for the activities or concerning the
activities is only due next year so probably only from next year on there
will be checks but yeah I'm not a lawyer so so I don't
know if if the authorities are basically giving some some leeway for
the company still and last question to you are they public tenders are there public tenders from
the German government or giz projects in the countries yes that's what is specified also
there also construction tenders for for construction companies or I don't know there is a
very famous case in in Switzerland a couple of years ago where police uniforms were probably
have been made which included some forced labor in in that way if companies are not
doing something about that then probably they will be excluded
for a certain period of time from from public tenders in various ways
thank you now we have a few questions for you Kathleen
so how has the implementation of the German due diligence regulation changed
your business practices the risk analysis and Reporting
I think when talking about our gaps I often mention the word systematic and I
think this is our main finding because we've done like I said we have a huge CR team we do amazing
projects but like we really need be more
systematic about we do things like every team is doing all their own projects and what we've done right now is that
we have a human rights team in which I am that is responsible for our due diligence framework and
currently we are reviewing every one of our tools all our Concepts to see where
do these tools really fit why are we doing what we are doing and could we
create more impact with our work and I think
this is this it's a huge project and I think really like the the law has
given us the yeah it's giving us the power to do
that and really do this stock taking and with regards to reporting I think
at Ali we are perfectionists and in the past we haven't really talked about a
lot of our work because we thought oh maybe it's only 95 and I think what
we're doing now is we provide a lot more information on our website also about what is not going so
well and looking for partners because yeah through collaboration I think we can
tackle a lot of these issues a lot better
I think you're on mute
sorry again thank you Catherine there's another question on
on verification system is there any formal internal or external verification for Aldi's hrdd I mean human rights due
diligence program and we have an internal audit department and of course the law is one of the most
prominent topics right now in the company so they are looking at what we are doing
and then the buffer the German Administration office that York
mentioned is of course going to to look at our due diligence program and what we
are doing like I said we are looking for partners for stakeholders who also
provide us feedback on our work and that's currently one of my main tasks to
identify people who can can really give us feedback on what we're doing with regards to Human Rights due diligence
great maybe we can get a last question is there another question that you wanted
to answer I think there was one question how we
deal with suppliers which have major non-compliances and neither follow the CR sees our requirement nor disclosure
of any information under its supply chain I mean we already during the last couple of years we have very strict CR
requirements because we need to like our suppliers our ears and eyes on the
ground because we do not we are not in direct contact in most cases with factories
so already in the past we selected suppliers who can provide us with data
and to follow our CR requirements if this is not the case like I said during my presentation we
do not end the business relationship lightly we try to support suppliers
doing an improvement process but if there is no willingness we have a like a
responsible exit strategy in place thank you thank you very much and last
question could you share one of the recommended kpis from CR
no because we are currently developing them but if you have any great ideas
please let me know get in touch actually at the meacon club we have a
tour for to set kpis for your team this is something our members can access online
and we're also working this year we'll also be working on kpis for suppliers
well yeah it's 5 p.m already so I think
I think we're gonna wrap up well thank you everyone for joining this webinar there will be a survey
at the end of the webinar so if you could please answer the survey it would be really helpful for us to get a
feedback and I would like to thank jorg and Catherine for your amazing presentations and sharing all those
insights with the audience it was a great session and if you have any
questions related to that webinar to the due diligence legislation to
supply chain due diligence or modern slavery you can always reach out to the meekclub
we'll send you an email with the recording and the materials and if
you're interested in becoming a member or if you would like to book a session to talk about any issues related to
Modern slavery that you may have you can also reach out to us thank you very much
thank you thank you