Home
Internal
published on 25 October 2023 | reading time approx. 2 minutes
On 1 January 2023, the Supply Chain Act (hereinafter "LkSG") came into force. This requires the establishment of an internal reporting channel for compliance with environmental and human rights-related due diligence obligations. In addition, the entry into force of the Whistleblower Protection Act (HinSchG) in July 2023 imposed a further obligation on companies, namely the establishment of an internal reporting system. Does the legislator now require two reporting channels, or can an existing whistleblower system be used?
With the entry into force of the Whistleblower Protection Act, companies with at least 250 employees, and from December 2023 already with 50 employees, are now obliged to set up a reporting channel within the company in order to protect whistleblowers and other persons affected by a report and to ensure that they are not threatened with any disadvantages under the Whistleblower Protection Act. At almost the same time, the Supply Chain Act has made it mandatory on companies with 3,000 employees, or from 2024 with 1,000 employees, to assume responsibility for human rights and the environment within their supply chain in addition to their own business operations. In concrete terms, this means an additional reporting system whereby own employees, suppliers and their employees can report violations of the requirements of the Supply Chain Protection Act.
Companies with more than 1,000 employees are obliged to set up a reporting system under both the HinSchG and the LkSG. In order to comply with both obligations, it is advisable for companies to set up a uniform reporting system. This is because the HinschG forms the basis for open communication and a responsible reporting system, while the LkSG ensures that companies monitor their supply chain carefully and react to possible violations.
Even though the two laws cover different areas of application, they pursue the same goal, namely to draw attention to malpractices. Whistleblowers' reports of grievances can also be helpful in uncovering environmental or human rights-related misconduct or can improve processes and measures within the company in the long term. It can also reduce the technical and organizational burden on the body responsible for the reporting system and increase the transparency for whistleblowers and complainants.
Apart from this great advantage, the two legal areas are not identical with regard to the internal reporting channel or the procedure for receiving such a report. Unlike the HinSchG, the LkSG requires that reports from outside the company be made possible within the internal reporting channel. The HinSchG also provides for a confirmation of receipt within seven days and an obligation to report back within three months. The LkSG, on the other hand, prescribes feedback for this purpose, but without a specific deadline.
However, the technical advantages of setting up a joint reporting office outweigh the different requirements. This provides clarity for all parties involved, in particular who is responsible for receiving and processing reports. The whistleblowers furthermore do not have to first check whether they are actually submitting a report to the right place or even fear that they have disclosed something to someone who is not responsible. A joint reporting office creates transparency and trust. For the company, this also means that no reporting channels have to be set up, monitored and maintained in parallel.
The actual implementation of these requirements must be examined individually for each company, as this depends on various factors such as size. However, we recommend not postponing the implementation in order to avoid the threat of fines, but also in order to be able to use the corresponding synergy effects of both laws at an early stage.
Dr. Michael S. Braun
Partner
Send inquiry
Nicole Heinrich
