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2. Introduction of GSCA is an affirmative legislative step by the
German Parliament to identify and assess environmental, social
and governance (“ESG”) issues, including potential human rights
violation within their supply chains (direct and indirect and across
jurisdictions), and establish effective risk management systems.
The basis of the Action Plan and the new national requirements is
the due diligence standard of the 2011 UN Guiding Principles on
Business and Human Rights.
INTRODUCTION
3. 1. ensuring that the suppliers act in compliance with the parameters set
out by GSCA.
2. respecting human rights and environmental obligation throughout the
supply chain.
3. establishing risk management system and regular risk analyses.
4. adopting standard policy statement and preventive measures within
the own business vis-a vis suppliers.
5. establishing complaints procedure and regular reporting requirement.
IN-SCOPE COMPANY’S
DUTY OF CARE AND OBLIGATION
4. 1. Termination of contract leading to direct business loss.
2. Reputational risk and loss of Germany based business opportunities.
3. Increased contractual risks including higher indemnity exposure.
4. Requirement of enhanced director & officers insurance and other
insurance policy cover.
5. Cost impact at multiple levels- compliance, ongoing standard
operating procedures, risk management tools.
6. Exclusion from low cost financing.
7. Loss of competitiveness vis a vis suppliers from other countries.
IDENTIFIED RISKS FOR DIRECT AND INDIRECT
SUPPLIERS TO GERMAN COMPANIES
5. 1. Introduction of a self-certification mechanism for validating compliance
by Indian suppliers within the ambit of due diligence which gives comfort to
both the countries.
2. Mandatory gap analyses in supply chain.
3. Mapping of Indian law to the requirements of GSCA.
4. Infrastructure support to MSME sector in India to meet the GSCA
requirement
EXPECTATION FROM INDIAN
GOVERNMENT