37 Taiwan Sporting Goods Manufacturers Association deutschland.de/EN/Business-Human-Rights/SupplyChain-Act/supply-chain-act.html 1.1.2 The term“human rights risk”, which triggers the application of the German supply chain act is defined in Section 2 of the GSCDDA in a very broad manner and covers illegal practices from child labor used in the course of the manufacturing of a certain product, the use of persons in forced labor, unsafe working conditions up to prohibitions or undue restrictions of the freedom of association of employees and workers, up to unequal treatment in employment, practices preventing an adequate living wage, damaging environmental manufacturing processes up to a disregard of safety requirements and other similar activities or omissions. 1.1.3 The way how the German legislator is looking at commercial supply chains is as broad as the human risk definition. It reflects a complete cradle to grave approach starting from the extraction of raw materials up to the delivery of the finished product to the final purchaser. 1.1.4 Furthermore, the GSCDDA requires those companies, which are caught by its law provisions to establish a highly comprehensive due diligence, risk management and risk analysis system, which inevitably leads to a substantially increased amount of bureaucratic burdens of the private sector and as a matter of course also leads to substantially higher cost administrating this system either in-house or with the help of external advisors. Details can be found in sections 3 to 9 of the GSCDDA. Companies must among others conduct regular risk analyzes, establish a scheme of efficient preventive measures, implement remedial actions and the establishment of complaint mechanisms plus the obligation to regularly document and report the respective company’s supply chain management practices. 1.1.5 Supply chains in the 21st century are often quite diversified and include several layers of direct and also indirect suppliers. The obligations to monitor the commercial activities of indirect suppliers are less strict compared to those towards a direct supplier, nevertheless indirect suppliers are not exempt from the application of the GSCDDA. 1.1.6 Very much summarized, the German Supply Chain Act puts its emphasis on the following nine prime due diligence obligations: (1) The establishment of an adequate and also efficient risk management system covering all operational activities of a company in the supply chain field; (2) To carry out on an annual basis a risk analysis relating a company’s own commercial activities and those of its direct suppliers. Such annual exercise must be complemented by an ad hoc analysis, if a company becomes aware of or expects a significant change of risk factors
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