On September 12, 2024, the Indo-German Chamber of Commerce (AHK India) conducted a webinar titled “Leveraging Learnings from the German LkSG for EU CSDDD: German Industry Insights for CSDDD Regional Preparedness Globally” that united global perspectives on the implementation of corporate due diligence.
The virtual session gathered valuable insights from AHKs across various regions that have been directly involved in supporting local companies with the implementation of the German Supply Chain Due Diligence Act (LkSG). Through their experiences engaging with businesses on the topic, the AHKs have gained practical insights and strategies for capacity building and overcoming regulatory challenges. These lessons offer significant takeaways for companies preparing for the upcoming CSDDD, providing a roadmap for navigating similar due diligence requirements and fostering regional preparedness in corporate sustainability.
The webinar aimed to shed light on the challenges and opportunities businesses may face and offer insights into effective strategies for adaptation through a cross-regional lens.
As articulated by Ute Brockmann, Deputy Director General – Indo-German Chamber of Commerce in her opening remarks, the enactment of the CSDDD represents a "historic moment" for the EU. The directive debuted in July 2024, initiating a two-year transition period for member states to incorporate it into national legislation. It is anticipated that these guidelines will be transposed by EU member states by July 2026, also extending influence on companies outside the European Union – directly on their subsidiaries outside the EU, or indirectly on their global suppliers.
Sabrina Abdel-Latif, Project Director at DIHK DEinternational GmbH, articulated some hurdles faced by companies globally while adapting to LkSG – noting that providing adequate guidance and effective communication between business partners is key. She also highlighted the interconnectedness of the LkSG and the CSDDD, noting that while both frameworks share similarities in risk management processes and potential penalties for non-compliance, the CSDDD will expand its scope by including indirect suppliers and requiring detailed climate action plans.
The panel discussion was moderated by Indras Ghosh, Head – SustainMarkets, Indo-German Chamber of Commerce and brought to light perspectives on the implementation of corporate due diligence from India and beyond – including insights from Hanna Dittmeyer – Head of the Competence Centre Energy, Environment and Sustainable Economy, AHK Services Eastern Africa Ltd., Raymond Chung – Director, Market Entry & Training Services, AHK Hong Kong, Huyen Nhu Lanh – Project Coordinator for Sustainable and Climate Resilient Supply Chains, AHK Vietnam, and Carlos Fernandez – Director, Santa Cruz Regional Office, AHK Bolivia.
Hanna Dittmeyer, speaking from Nairobi, explored how the awareness and implementation levels of the LKSG vary significantly between organisations in Kenya. While some exporters are well-versed and have established due diligence systems, others remain uninformed about the laws and their implications. This discrepancy points to a crucial need for continuous education and training to enhance understanding and facilitate compliance.
In contrast, Carlos Fernandez elaborated on Bolivia’s unique trade dynamics, noting that while many companies are affected by the LKSG, a major challenge remains the lack of institutional capacity for monitoring compliance. He emphasised the importance of strategic partnerships to provide businesses with the tools and information needed to navigate the complex regulatory landscape. By identifying local partners, such as NGOs, that can provide support, companies can create a more conducive environment for implementing necessary changes. He added that understanding the gap between local laws and the European directive is critical for effective implementation.
Speaking from Vietnam, Huyen Nhu Lan highlighted the increasing involvement of local businesses in implementing supply chain due diligence through their existing connections with German firms. She pointed out that local suppliers are increasingly recognising the need to comply with international standards, suggesting a shift in mindset where adherence to such regulations is seen as integral to maintaining strong business relationships.
Raymond Cheung from Hong Kong provided a unique perspective on the challenges of compliance in a sourcing hub. He observed that while there was initial panic regarding the LkSG's requirements, companies are now beginning to embrace the directive. Cheung emphasised the importance of not only meeting standards but also establishing transparent, trustworthy relationships throughout the supply chain.
Through the collective discussion, it was made clear that the ongoing progression of corporate responsibility is becoming a fundamental aspect of global business. As global supply chains become increasingly asked to be more accountable toward the impact of their business activities, the emphasis on responsible business practices will only intensify.
This swiftly changing landscape signals large companies to not only comply with regulations but also to actively foster a culture of sustainability—a journey that, although daunting, presents opportunities for innovation and collaboration across borders. The trickle-down impact of responsible business regulations along the supply chain appears to be quickly adopted as standard business requirements, becoming a part of the "cost of doing business”. Understanding these dynamics will be crucial as businesses navigate a future where sustainability and ethical governance take precedence.