Verisk Maplecroft LkSG Dataset maps entire scope of risks in new German supply chain law

Dataset developed to support LkSG compliance and HREDD requirements

A new Dataset launched by Verisk Maplecroft is the first and only geospatial resource available to pinpoint the global exposure of companies to the entire range of issues laid out in the German Supply Chain Due Diligence Act, or LkSG, which came into force in January.

The company’s LkSG Risk Analysis Dataset will help the first tranche of about 800 large German registered businesses subject to the law analyse all LkSG risks across their global operations and supply chains. It features over 25 global and subnational indices that precisely capture the human rights and environmental risks and prohibitions defined in the law from country, sector and raw material-specific perspectives. From the start of next year, almost 5000 companies registered in Germany are estimated to be in scope of the law, with around 40% of these being controlled by foreign multinationals.

Conducting detailed supply chain risk analysis sits at the heart of the LkSG’s obligations, with companies in scope needing to identify their risk exposures and develop comprehensive human rights and environmental due diligence (HREDD) processes. Foreshadowing the EU’s forthcoming and potentially more comprehensive Corporate Sustainability Due Diligence Directive (CSDD), the LkSG has raised the bar for mandatory supply chain due diligence across Europe and beyond. Companies that get on top of the LkSG now will be well placed to handle CSDD later.

A comprehensive risk analysis data solution overcoming the complexity of LkSG

The Dataset draws on Verisk Maplecroft’s best-in-class portfolio of risk indices, covering issues such as child labour, modern slavery, occupational safety and health, and water pollution. In addition, it includes three entirely new subnational indices developed in response to the LkSG’s requirement for companies to map their exposure to Mercury Pollution, Hazardous Waste and Persistent Organic Pollutants. Each index in the Dataset assesses 198 countries and is updated annually or quarterly; 80% provide sector risk coverage across 80 industries, while over half deliver subnational data insights, ranging from state to site-level. It also includes indices measuring appropriate context-dependent factors, such as conflict, judicial effectiveness, corruption, and women’s and girls’ rights.

“Risk analysis is fundamental to the LkSG and its HREDD requirements – doing this effectively will be overwhelming for many businesses, especially those that do not already have the necessary systems, risk data or skills to cope with its huge complexity.” says Verisk Maplecroft Director of Human Rights, Dr James Sinclair. “This solution will help businesses rise to the challenge of compliance with the LkSG by enhancing and accelerating their capacity to meet the law’s exacting requirements.”

Using the LkSG Risk Analysis Dataset, companies can robustly identify their high-risk exposures at-scale globally across all relevant risks, operations, and suppliers, as well as potentially affected vulnerable groups. Verisk Maplecroft’s HREDD consultants are also available to help companies fully understand how to integrate the data into their initial abstract risk analysis, and take effective, concrete action based on the results. Using the company’s Commodity Risk Data, they can also support with the analysis of risks related to upstream raw materials, where supply chain visibility is often severely limited.