Check Your Value Chain

Since 2024, the SCDDA has required companies with 1,000 or more employees to comply with human rights and environmental due diligence obligations in their supply chains and to document these transparently.

The CSDDD will add more comprehensive requirements from July 2027: it also considers the downstream supply chain and tightens the requirements for social and environmental aspects. The CSDDD will come into force in stages: first for companies with over 5,000 employees and €1.5 billion in turnover, then gradually for companies with 3,000 and 1,000 employees respectively in subsequent years.

As due diligence requirements are significantly more complex and time-consuming, it is advisable to introduce processes and solutions now that efficiently cover these guidelines and position your company as a responsible player in the market.

Turn this obligation into an opportunity by creating resilient supply chains that ensure your company's long-term ESG compliance and competitiveness. With the SCDDA/CSDDD module of our value chain compliance suite, we provide you with the right, pragmatic solution.

The EUDR requires companies to only import deforestation-free products and products made from them into the EU or make them available within the EU. To do so, they must fulfil comprehensive due diligence obligations, collect geolocation data, carry out precise risk analyses and submit due diligence declarations.

The Deforestation Regulation Manager, the EUDR module of our value chain compliance suite, supports your company in the automated implementation of complex due diligence obligations: from simple queries of geolocation data and satellite image analyses to precise risk analysis and automatic transmission of due diligence declarations to the EU information system TRACES.

The CBAM aims to create CO2 price parity between EU production and imports and support the EU's climate targets. This means that companies are required to report the emission values of CBAM-relevant goods, including iron, aluminium, steel and fertilisers.

The Carbon Border Manager, the CBAM module of our value chain compliance suite, helps you to automatically comply with this reporting obligation, which will apply from 2026 – from data collection and emissions assessment, including cost forecasting, to the creation of an EU-compliant CBAM declaration. This allows you to meet your legal obligations effortlessly and cost-effectively.

The following regulations apply to both your own company and your direct suppliers in order to ensure supply chain compliance:

• Drawing up a policy statement and defining internal responsibilities
• Establishing risk management and risk analysis on the subject of human and environmental rights – at least annually or additionally when necessary
• When identifying risks: taking measures for prevention and remediation
• Ensuring complaint mechanisms and procedures are in place to identify risks, including those involving indirect suppliers
• Conducting an effectiveness review of the measures and procedures introduced – at least once a year or additionally when necessary
• Publish internal documentation and external reporting – once a year (no later than four months after the end of the financial year)

It should be noted that various EU regulations set specific priorities: The EU Deforestation Regulation (EUDR), for example, requires the accurate recording and documentation of geolocation data down to the parcel level to ensure deforestation-free supply chains. Other regulations, such as the Corporate Sustainability Due Diligence Directive (CSDDD), impose additional requirements on human rights and environmental risk analyses as well as prevention and remediation programmes.

Risk assessment of suppliers prevents child labour, slavery, forced labour, disregard for occupational health and safety, unequal treatment in the workplace, discrimination, the use of private/public security services and their disregard for human rights, and the withholding of fair wages. 

Unlike other solutions on the market, “Check Your Value Chain” does not require you to preselect business partners. All your existing business partners are analysed and continuously monitored, regardless of whether they are subsidiaries, direct or indirect suppliers. The automated risk assessment of suppliers, daily monitoring and evaluation of more than 10,000 multilingual media sources, and verification of up to 200 assessed certificates can save you up to 500 person-days. 

Unique on the market is the double-secured media analysis to reduce the number of hits that are otherwise often mistakenly declared as positive: in addition to AI-based media analyses, an editorially secured analysis is carried out by the renowned NGO Business and Human Rights Resource Centre (BHRRC). Furthermore, PwC reviews articles in German and English for plausibility before they appear in the respective customer's instance. 

The modular approach of "Check Your Value Chain" also allows you to flexibly adapt the software to your company's requirements and select exactly the modules that support you in implementing your individual due diligence obligations. Our methodology has been tried and tested on the market by companies of all sizes. 

The implementation effort is minimal at five days for the standard configuration, as instances can be set up quickly and easily using the SAP Business Technology Platform. Thanks to the import and export functionalities in the software, interfaces to your systems are not absolutely necessary. Organisational units, roles and users can be set up in one to one and a half days. The most time-consuming tasks for companies are selecting the suppliers to be analysed and providing the relevant data.

As "Check Your Value Chain" is multi-client capable software, you can automatically generate as many BAFA reports as you wish.

Supply chain compliance is crucial for your company, not only to avoid legal consequences, but also to protect your reputation and promote sustainable business practices.

The amount and type of sanctions for non-compliance with supply chain laws vary considerably depending on the law, company size and scope of application. For example, companies with more than 5,000 employees or high turnover are subject to strict reporting requirements and fines of up to 5 % of global net turnover under the CSDDD, while different rules apply to smaller companies. The EUDR provides for severe penalties that already apply to medium-sized companies with extensive supply chains. The Supply Chain Due Diligence Act (SCDDA) also sets its own standards for fines, exclusion from tenders or operating bans, and provides for fines in the millions. 

Sanctions that could significantly impair further business activities are also possible. These could include, for example, the restriction or withdrawal of trading licences. 

Many governments and public institutions also require their suppliers to comply with certain social and environmental standards. Violations of ESG guidelines can result in a company being excluded from public tenders and contracts. 

In some cases, failure to comply with ESG requirements can also result in the withdrawal of trade privileges such as customs concessions or access to certain markets. This significantly impairs a company's competitiveness.

In addition to administrative penalties, civil and criminal proceedings may also be initiated against the company and its executives. In the worst case, prison sentences may be imposed.

It can be assumed that regulatory pressure on companies with regard to supply chain transparency will continue to increase.  

While many current ESG guidelines affect specific industries, company sizes or geographical regions, future legislation is expected to have an even broader application. As a result, smaller companies and a wider variety of industries could also be subject to the new regulations. 

As supply chains become increasingly globalised, international cooperation on the regulation and enforcement of supply chain laws will also continue to grow. In addition to guidelines that have already been adopted, such as the CSDDD, EUDR and CBAM, governments and international organisations could develop further harmonised standards and common frameworks to facilitate compliance with supply chain transparency and avoid distortions of competition.