Welcome. I would like to welcome you to our webinar of today. We want to discuss the implementation of the Supply Chain Due Diligence Act, named the LKSG, the German Supply Chain Law, the Lieferkettensorgfaltspflichtengesetz. This is the very long German word. My name is Bettina Jahn, and I'm Division Manager Innovative Product Management, and here to support my colleagues in this webinar and facilitate going through these very fresh and new informations. I think you have already gone through the housekeeping rules, so have in mind that later when we are coming to the question session, that you have to type in in the questions and answers widget below on the right side. Please be ensured we will come back to you if we will not have time in this webinar. Later, we will send by email our answers as well. First, let's start.
I want to introduce our speakers and give a very warm welcome to Carina Abreu. Carina's main topic is sustainability, ESG, and social effects. Carina studied electrical and computer engineering in Coimbra and started her professional career with Nokia. After several years, then in 2014, she joined Sapana team, and she was there fascinated by innovation. She was there for three years as a COO. She recently completed the Business Sustainability Management training at Cambridge and is one of the co-founders of C-MORE. We are very thrilled to have her here and learn on our new tour. Our second speaker is Dr. Anne Rödel. Anne is one of my colleagues here in SGS. She joined us in 2023, and Anne has a background in the forestry and timber industry. She's mainly worked on projects in the field of environmental and sustainability assessment. She's our expert here.
She taught at the universities in Hamburg and Eberswalde and is specialized on life cycle assessments, calculations, and verifications of carbon footprints, EPDs, ESG services, lots more, of course, training and webinars. So Anne, we are very pleased to have you here, and we will start with the agenda. The speakers will go through an introduction of SGS and C-MORE, of course. Then they will dig a little bit deeper into the legal basis of the LKSG and how the LKSG tool can help you. Yeah. And we will have a live demonstration and the Q&A session. So ladies, dear speakers, let's start and continue. Thank you.
Yeah, thank you, Bettina, for this nice introduction. Also, a very warm welcome and good morning or good evening from my side, wherever you are on the globe. We want to present today our new tool, and I will start with a short, yeah, introduction into SGS, and Carina will take over and present her company, C-MORE, and how we cooperated. Yeah, for those who don't know us, we are a world market leader of testing, inspection, and certification with around about 100,000 employees worldwide. Yeah, almost in every country, we have our colleagues and yeah, fulfilling services and certification in seven focus areas, but also, yeah, training and consulting is our business. That you have more insights in our expertise on the social and environmental topics we are talking today.
We have this slide here, and we see our services and our long experience in this field, for example, in social assessments. We have over 800 auditors worldwide, with we are making audits and different standards in the social system or client-based systems, checklists, whatever it takes in different industries. But also, we do a lot of environmental management system audits with every topic which are related to that. We check chain of custodies for, for example, for paper wood products, fishery, cotton, or conflict minerals. But we also have expertise in security, assuring security measures and action plans. Yeah, I would hand over to Carina to present C-MORE.
Thanks, Anne. Good morning and good evening to everyone. Welcome all. I will make a small presentation about C-MORE. C-MORE is an ESG tech company that developed a software as a service that helps our clients on their sustainability journey from A to Z. And for that, we have a set of features that allow the companies to assess its maturity level in terms of ESG and identify some initiatives that can be implemented in order to improve its performance. It allows also to monitor its KPIs, its sustainability strategy through the monetization and definition of targets and action plans, also to calculate the carbon footprint, extract reports that are aligned with the main frameworks and European standards, also to benchmark with other companies within the same sector and dimension, perform a reputation analysis.
Finally, and the reason why also for this webinar today, a full ESG analysis of the supply chains. It is with this feature and in this area where we are providing this support to comply with the LKSG requirements that we will go in more detail today. We are also in different countries and sectors, in particular in energy, banking, agro-industry, manufacturing, and tourism and real estate sector. As I mentioned before, it is in the support to assess and monitor the supply chains where the partnership between C-MORE and SGS sits. And let me firstly say that we feel absolutely honored of it, and we thank SGS for trusting us. We really complement and support each other. Through that, we are able to provide you a complete service to comply with the LKSG requirements in an efficient and cost-controlled manner.
And so our service goes from the data collection, data verification, and then the reporting preparation to comply with these requirements. And now we'll pass the word to Anne that will explain and go into detail about these requirements.
Yes, thank you. Yeah, before we can start to look at our solution, we have to set a little bit of the legal basis or this understanding. What is the LKSG about? I don't know how your knowledge is in that case. Probably you joined that webinar just to inform about the requirements of the law, and this will be the next part of this webinar. We look a little bit into the law and what it says and what it recommends. It was, so to say, just the German law so far. The European version is underway. It's close to be, yeah, close to be appointed and committed in the European Union. But we concentrate now on the German law so far because this is already enforced since 2023.
But now in January, 1st of January this year, 2024, it was expanded or extended to also companies having more than 1,000 employees. Before, it was only for larger companies, but now it's narrowing down and also is into force for the smaller types of companies. These companies have to have a branch in Germany. Also, if they are foreign companies and have more than 1,000 employees in Germany, then they have to stick to this law or have to fulfill the requirements. This is also, if you ask yourself, is it also valid with, do I have to count also my temporary workers or employees? Yes, they will be counted if they are employed for more than six months. They will count to this 1,000 employees all over.
Yeah, the aim of the regulation, so just to set the frame, is that you manage and minimize your human risks and environmental risks in your supply chains and the company supply chain. Yeah, what requirements we have here, we will see in the next slides. These are the topics that are addressed by the law. We have, first of all, this field of labor issues, though there's, for example, child labor, forced labor, or slavery, which have to be managed or have to be observed at least. Always keep in mind we have a system which is asking for risk minimization, risk management, or so-called risk management law. These are the topics you have to keep an eye on in order to fulfill these requirements.
The second bigger part is all about health and safety and work conditions for your workforce and also the handling and use of chemicals. The third part is all related to freedom of association, equal and non-discriminatory behavior and treatment of the workers, reasonable wages, for example. And then this other part, the environmental part, it's concentrating on soil and environmental pollution and water consumption, waste management practices, and the handling of mercury if this is relevant for your company. And yeah, the last part is also about, or the last two parts are about land grabbing and land rights so that you operate in the legal frame and can show that you have the land rights for these special areas where you operate. And also, if you use security services from third parties, then you have also to manage these issues according to the law.
Which obligations it says you have, there is the regular risk assessment. As I said, it's a law about risk, analyzes risk management. So you have to do this regularly, risk assessments and risk ratings for your suppliers and in your supply chain. And therefore, you have to monitor your suppliers, what they are doing, how they perform. And yeah, in this case, if you feel there's something going wrong or they don't perform as they should or they don't obey the laws or whatever, or these topics I showed before, then yeah, you have to handle this somehow. And yeah, this is, yeah, you have to take appropriate measures, preventive or remedial measures if you have the feeling there's something going wrong. And there are different opportunities how to handle this, but you know mostly better how to do that.
Then, this should be more novel or a first step development of a policy statement or that you integrate that in your policies, in your goals of your company, and that you can show, okay, we are caring for that, we fulfill our due diligence requirements. Of course, fifth point here, you have to find responsible persons or persons in your company who are responsible for these topics. Mostly, you probably have already quality manager or health and safety managers, so they would be probably the right persons to do that job and to handle this because they are familiar with these issues. Also, environmental manager probably. And you have to hand over these responsibilities and clearly set out who does what and who is responsible for what to properly manage this topic.
The sixth thing here, establishment of a grievance procedure, it's also part of the law. It should not happen that you come into bad situations. Therefore, you should take some measures beforehand. The seventh is the very important point. You have to document and to report on all your measures you have taken during the year and have to give this report to the offices or to the regulatory body. In some cases, it's also necessary to care for your indirect suppliers, not only for your direct. So the laws, first of all, saying you have to care for your direct employees, suppliers, but in some cases, it's going down the chain. So also indirect suppliers should be surveyed and monitored. What are the challenges? I mean, you can reflect yourself already.
Probably you went through everything in your head, what I have to do and how to implement that in my company. There are several. So I mean, if you have risk management in your company anyway, you know about it, how to do things and to understand risks because they can have different sources and from various types of, yeah, origin. This can be the region where some materials, resources come you source or you are supplied with because of your production chain and everything you need. This can be different types of products, and they cause different trouble. For example, this issue what I mentioned with the mercury, if you use mercury in your production, then you have also to fulfill the requirements of the law in these terms. If not, then it's not an issue for you and your company. Yeah.
Then it's also relevant how much turnover you make with a certain supplier. So it might be a higher risk if you have only a few suppliers or you make a lot of business with only a few suppliers, and they are probably not really performing like you wish or like the law asks you or the suppliers. But there can be also different other risk sources or risk causes, health and safety issues, yeah, reputational issues, quality issues, but I think you handle that already in your supply chains. This is what you're familiar with. But then also social and ethical practices, probably not everybody has under control now or is just starting with. But this is, yeah, the basic of this law, these social issues. Yeah.
What do you have to do concrete?
So I already said you have to do these regular risk assessments.
This is once a year, and you have to rate your suppliers according to these requirements of the law and these topics I showed before. You have to take preventive measures, not that something pops up you are not aware of or prepared for. You have to establish this risk management system, and you have to document internally the activities, what you did and how you did this risk assessment, and what measures did you take to fulfill the obligations. These documents have to be kept for at least seven years, this says the law. You have to publish an annual summary of the previous financial year. So that means, yeah, if you start now, then you have to prepare until the end of April next year, the first report for your, yeah, for your risk management according to this LKSG obligations. Yeah.
This is the last point here, not later than four months after the end of the financial year, whenever this is in your company. Mostly, it's in the end of the year, the calendar year, but if it's different, so then the law says just, yeah, no later than four months after this is ended. Yeah.
What should be the contents of this report you have to publish?
You have to report or describe the human and environmental risks you found or you think you have in your supply chain.
You have to consider the elements in the law, and you have to describe all according to the law, what have you done and what are the outcomes, which measures you took, and yeah, how you regulated or what you have done against issues which probably popped up during your risk assessment and how you will handle that in the future that it not happens again. And how you can prepare, this is probably your next question, what can I do? And I think the first step will be that you get an overview over your suppliers, who is supplying you with what material, with which resource. So that you see, yeah, probably business areas which are more critical in terms of environmental or human rights issues than others. So there you can make a rough or get a rough overview first.
Then, yeah, it's also important or can play a role which countries the suppliers are based, from them, yeah, where you are sourcing and what are the conditions there, what are, for example, the labor laws or the environmental laws in that region and what do you know already or was there any issue in the past, for example, you had with this supplier where complaints were you received some complaints or whatever. So you probably already have a good map over your suppliers. Yeah, and then you should analyze their performance in terms of these issues I showed on the slide in the beginning in terms of environment and human rights issues, how they perform in this manner. And if you find a high risk under these suppliers, then you should take measures to minimize them. Yeah.
And with this, I think I hand over to Carina again. And she will explain how this LKSG Tool can help you with these issues.
Thanks. And so, yeah, now we are going more detail about how the tool can help you to face all of these challenges and help you on that journey. And so, as we mentioned before, through this partnership, we are able to provide you a fully managed service to ensure the risk analysis of the suppliers. And so for that, what this includes and what we can guarantee you. So it's accurate and it provides accurate and up-to-date supply information with the early updates that you have to do it once a year as shared. So it covers the law, the LKSG criteria.
It allows to do a performance analysis of your enterprise and your suppliers and identify some preventive measures that can help you to improve your performance. You can make this risk assessment to all your suppliers, and it also allows you to have to store all the information, so the answers the providers, so the data collected through the assessments, and as well, all the evidences that you have, you can store in one tool so that anytime it's needed, it's easy to access. In case of there's the need for high-risk suppliers, it is possible to provide an on-site audit if needed. Then, some possible applications of the tool. First, we have this risk assessment, so where you can identify the risks of all your supply chain by assessing the different areas that Anne has showed you before.
Also, you can, through benchmarking, identify some performance gaps and through that implement some measures. And also, through the data collected and based on the risks identified, we can perform some more audits as the on-site audits for the high-risk suppliers. So the three main core values about our tool, and that guides all the features that it has. So first of all, the transparency of your supply chain. And then I will go into more detail in each one. Also, this continuous improvement of the performance of your suppliers. And also this intelligence that is through all the data collected, we can provide some data insights and identify the trends. So how the tool works and can support in each point. So you can invite in an easy way all your suppliers to log into the tool.
Then you have this onboarding process where you can count with our support to onboard and to onboard all your suppliers. And then each supplier will have access once a year to the LKSG questionnaire just to assess the risks associated to each area. Then after answering to the assessment, then is when SGS starts the verification process, analyzing the evidences and identifying some red flags and risk points to share with you and the supplier. And then comes the output, so the final result where each supplier can have access to its report, how it is performing. And the enterprise can have access also to several filters that can map the high-risk suppliers, low-risk suppliers, and try to align these improvement measures. Then the tool is really flexible, so you can create your dashboards, so dynamic dashboards with all the information that we collect.
So you can, for example, identify how many suppliers are in a specific range of risk, how many suppliers have a specific policy, how many suppliers are closed or acting in a specific area or sector. So you can have this global view of all your supply chain, and we are able to add more information that you'd like to see in this dashboard to make this analysis. And then, of course, in the view of each supplier, you can see the individual information of each one. And here is another example of a dashboard. So here you have, for example, you can have this global view, so a world map where you can see where are your suppliers and how's the risk associated to each region, and then also per topic that were assessed. Pass the word to Anne. Thank you.
Yeah, how we support and the onboarding, but also the whole process from our side. So we have the system. So as Carina explained, you provide us the list with your suppliers, and we insert them into the tool. And then your suppliers receive an automatic email, and then they can start individually their enrollment and also the answering of the questionnaire. And then you will see the clients who already responded and those who did not. And therefore, yeah, we can also have this tracking of incomplete questionnaires, for example. As soon as they did all the necessary steps and filled in the questionnaires, we can start the verification from our side, see everything is correct. And if there are some mismatch or incorrect data, so we correct and are available for these issues. Yeah.
If the result is of the questionnaire and of the risk analysis that there are several issues, we can also offer special data verification, whether on-site or remote, to specific suppliers and if you have a need for that. Yeah. This slide shortly summarizes the advantages of our tool. First of all, this is a very good opportunity to have a cost-efficient tool to save costs with this IT solution. You don't need a person who spends time on that, and it's going more or less automatically, and you can see the results. You save valuable internal resources with this. You have an efficient management, so you see everything in one place. You have this one risk assessment process, which you can also present to the authorities, and you say, "Okay, I handle this issue of the LKSG with this tool.
Here's everything in. You fulfill all the legal requirements and obligations. You can analyze the performance of your suppliers on one glance with the dashboards Carina showed. You have everything in one place. There's the questionnaire and the data and the results. No mess with Excel tables or whatever. It's everything in the tool. As I said, yeah, risk-based orders are offered where needed. You have also the short lane to us, and you can ask us for help with certain issues if needed. Yeah, as I mentioned, also the European Corporate Sustainability Due Diligence Directive is on its way. It will be implemented in the EU, not yet fully there, but in the pipeline. This tool can also be adjusted or will be adjusted to this European obligation.
So far, it's the German law and text because this is already there. But yeah, there is still the opportunity to adjust that. Yeah. And now we have talked a long time very theoretically about the tool, and now hand over to Carina to the demonstration.
Yes. So I will share my screen and enter into the tool just to show you a little bit what is the supplier experience, mainly regarding to answering the questionnaires so that you can see. And then we have a small video just to provide you a view about the enterprise view with all the suppliers. So let me share my screen. Hope you are able to see it now. So one important thing, so our tool is white labels.
So the brand, the colors can be customized to your company, and you can have the homepage also customized to you to onboard your suppliers. So when the supplier is invited, the supplier logs into the tool, registers the company, and then is able to go directly to the questionnaire, the LKSG questionnaire. So as you can see, the questionnaire is organized within the different topics that the LKSG law requires. Then it saves automatically the answer. So if something happens and you have to log out, so it saves automatically, and you can change to different categories at any time. The supplier can invite other users from the company to help answering the questions. So they can involve different people from the team. They can, in each question, attach the evidence and leave comments. So I'm going to enter here in a specific category.
So, in all the majority of the questions, we always have those helping points so that helps the supplier to answer. This is something that we are always improving. We have this possibility of leaving comments. You can attach an evidence and then assign a user. The questionnaire is done in a decision tree way. So when, for example, here, when I click yes, it might open other questions. So it helps the questionnaire to evolve considering the supplier sector operations and also maturity. We can go to different areas, and we have the different questions. Then just show you an example of the dashboard of the supplier after answering and submitting the questionnaire. Of course, there is this verification part before from SGS that if needed, SGS is able to request more information to the supplier to update the document if needed.
Here there will be there is the overall risk. Then you can click and go to see to the different topics and see the several risks associated to the category and then to the subcategory that were assessed. Also, all the documentation will stay into the tool for the supplier, but also for the enterprise. Let me stop sharing. I will try to put the video. Just this video aims to show you the main highlights and how is the tool for the enterprise view. Okay. Okay. Okay. So as shared in the beginning, the presentation and everything will be shared with you. We are completely open to have a meeting and present you the tool in more detail. But feel free to make all the questions. So we'll go to the Q&A. Yes.
If you have questions, please type it in this little box on the right-hand side.
Questions already fly in. So just wait a little bit more. There is one on the cost of the tool. Maybe we can tell you that you are, of course, invited to contact us directly. This is, of course, a very effective tool. So costs are under control. And maybe Anne, maybe you will say one or two sentences more on that. But I think it is really a good idea to contact us and dig deeper into this topic. Yeah.
Yes. I can definitely add to this. It's not that expensive that you may expect, but we cannot say that in this round here. But please contact us directly, and we will have an appointment and show you everything in detail.
Yeah. And it also depends on the requirements.
So, on a meeting, we can align on the requirements that you have. Through that, we are able also to provide you the year cost of the tool. Yeah. Yeah. There is a next question, and it's about the features of the tool. It is about if it is only about the risk assessment or what other features are in there as well. Yeah. So, nice question. So, regarding to the LKSG, I mean, specifically to the LKSG tool, it makes this risk assessment and analysis of your suppliers and provides you all of this information and guarantees you the compliance with the LKSG legislation. It provides you a dynamic dashboard that can provide you some insights also. But as shared in the beginning, the tool itself can provide more features that we have.
And of course, we can align and provide you different features for indicators, monetization, strategy, monetization, carbon footprint calculation, so benchmarks. So there are several features that we can complement with the tool, also with this LKSG and supply chain analysis.
And maybe you will add something more about it's not only about risk assessment, but as well about risk management. Anne, maybe you can say one or two words on that.
Yeah. Sure. As we presented, so you have the full data then in this tool, and you can arrange your dashboards. You can customize them, and then you can also see where the pain points are, so to say. So if the supplier gets a red button, then you see, okay, there's some issues, and you can dig deeper into which field these issues are occurring.
There might be a special point, and then you can step in and manage there something. Okay. I hope this clarifies. I think there are more questions regarding this issue.
I think we can go to the next question. There are already a couple of tools on the market linked to the LKSG. And yeah, there is one question if we can highlight our competitive advantage compared to these and what would be a reasonable argument to choose the SGS LKSG Tool.
Yeah. So I can start. So I would say that the main advantages and the main highlights about the LKSG Tool is this flexibility so that you can create and customize your dashboards with the information that you want to see and analyze about your suppliers. Also, this simplicity of using in a supplier's perspective, but also as an enterprise perspective.
Also, you have all of this onboard and support from SGS that has a huge experience on that, and as well the verification process. Also, this possibility of having all the information stored in one place so that you can comply with these 7 years that you need to have the information. It's intuitive. And also, as Anne and Bettina was sharing and to reinforce is this possibility of you to manage and monitor all your risks associated to your suppliers and help also them to improve and define those measures with them. And another point is that you can reuse the data. So the supplier also, through this report, can also use it to address other requests, for example, from financial institutions, other clients. So it also has this possibility for the supplier's perspective.
Okay. Thank you, Carina. So a couple of more questions are here as well.
One is of the cost paid by supplier or the brand. And I think I can quickly take this. And Anne, you can add. We have a shared model. So there will be some of the costs which are paid by the suppliers, some of the brand. We call it buyer or the company who has to fulfill the LKSG. And of course, there are mixed models. So we are going down to have a kind of a shared model, of course. Anne, do you want to add something to that?
No, but this is a good question. So we forgot to mention. Thanks for this. This is very, yeah, that is shared. Not everybody is taking it. Only one party is covering the whole cost. So this is the main message. Yeah.
Okay. So what else do we have?
Probably there are some questions of our tool can fulfill beyond the CSDDD and the EU and in the future. And of course, now the LKSG, very strong other requirements in other countries. Maybe Anne, you want to say something on that? Yeah. As I said, so CSDDD, it will be covered. U.S. requirements, I must admit, I'm not quite sure about that one. But please let us know what are the requirements. And this can be adjusted also to U.S. requirements if needed.
Yeah. This is definitely a tool and a product from SGS, which will be further developed. So first step is the LKSG tool. And I think it's quite appropriate now to really help you and make your approach streamlined. And then we will see which countries and obligations will come next, of course.
So what else do we have? There's one question on the languages of the questionnaire. I don't know who wants to take this, Anne, or maybe Carina. I don't know.
Yeah, I can start. And so yeah, overall, we choose English for the main language so far in the beginning, but there is also German and Portuguese available. And there will be more languages. Carina, can you add on this?
Yes. We also have it prepared for Spanish and Portuguese and French. And it's easy in a tool perspective to add other languages in the future if needed. So this is something that, of course, we can adjust.
Okay. So take your chance. There are still maybe one or two questions we can go through. If we are not now answering everything or you even have more questions after the session, please feel free to come back to us. We will answer them. We then later send them out via email. As said in the beginning, please know we do capture our questions and feel free to contact us. What do we have? Maybe there's one thing. If you can highlight maybe a main feature in the tool, what would you do? What would be for you the main feature where you would just recommend to dig a little bit deeper maybe in a one-to-one session for the clients joining now? What would be your favorite, Carina?
Okay. Outside this risk analysis, the risk analysis, all the monetization process that you can have into the tool regarding your supply chain. So to analyze and monitor all the performance. Also, I would mention, again, the dynamic dashboard. So because you can add different indicators and analyze different information at the same time.
And this possibility of having everything in just one tool to store the information and also easy to use in both perspectives outside main desk. So the analysis, the monetization and management, risk management, and also this dynamic dashboard to help you on your analysis.
Yeah.
Okay. So yeah, Anne, do you want to add something, please?
Yeah. And probably we can with this also answer another question in the chat. Can the supplier share the report to other clients? And the supplier, so there are two options. So if you enroll as a supplier and enroll separately, yes, you can show it with multiple share it with multiple clients. There's the feature there, of course. But if you enroll as a company with several suppliers, you will have them all at a glance, but they don't see each other. You just see the buyer. We call it buyer view.
You can have an overview of all your suppliers, but they don't see each other. So the secret is kept and all the business secrets, so to say, are kept. Then but if you enroll as a supplier only, then you can also share it. I don't know whether you want to add something on this, Carina or Bettina. Yeah.
Yeah. I think this is, of course, a very important topic. Yeah. So we didn't touch it yet. I think it is that it can be shared, of course. Data privacy and data protection is, of course, a very strong topic. If you want to have more information on that, we can come back to you. Just contact us. I think there are a couple of questions going into this direction where we can later answer them as well and send them out via email. I think we are now coming to an end. So Anne, what would be your last message or your encouragement to those attending?
Yeah. Thank you for listening for first and final message. Yeah. If you're interested in the tool, reach out to us. We are very pleased to help you and to guide you through and to start the journey with you. Sorry. This would be my last words here to this. Probably want to add, Carina.
Yes. Thanks. And I'm completely aligned with you. So thanks for joining the webinar. And yeah, we are completely available. So from SGS and C-MORE to have and yeah, feel free to contact us.
Okay. Thank you very much to our speakers and thanks to the audience. Thank you all. Thank you very much.
Bye. Bye.