LSHC Horizons Brochure 2024 - Flipbook - Page 8
Hogan Lovells | 2024 Life Sciences and Health Care Horizons | ESG and Supply Chain
ESG compliance and supply chain due diligence
The regulatory landscape regarding
Environmental, Social and Governance (ESG)
topics has been evolving rapidly in the ESG
compliance and supply chain due diligence the
spearhead with the entry into force on 1 January
2023 of its Supply Chain Due Diligence Act
(SCDDA). The SCDDA stipulates comprehensive
due diligence obligations also affecting national
and international players in the life sciences
and health care sector. Due diligence obligations
include risk management and risk analyses,
but also preventive measures such as audits.
As of 1 January 2024, the SCDDA applies to
companies that are domiciled in Germany or
have a German branch office and have normally
at least 1,000 employees.
In Germany, the Federal Office for Economic
Affairs and Export Control (BAFA, in
German (Bundesamt für Wirtschaft und
Ausfuhrkontrolle) as the competent authority
has been actively enforcing the SCDDA from
the very beginning, such as by issuing several
waves of binding information requests and
publishing various far-reaching official
guidance. Notably, the Pharmaceutical Supply
Chain Initiative (PSCI) provides a sound basis
for SCDDA compliance. In particular, PSCI
audits may serve as useful tools to create
synergies for the risk analysis as well as for
preventive or remedial measures. However,
companies should diligently assess whether
the evolving requirements are covered by
PSCI standards.
Christian Ritz,
LL.M. (USYD)
Partner
Munich
This is equally true regarding the agreement
in principle on the EU Directive on Corporate
Sustainability Due Diligence (CS3D)
(December 2023), which would finally lead to
even stricter due diligence obligations as well
as a public and civil liability regime for both EU
and non-EU companies of a certain size in the
medium-term.
Due to the ongoing transition from soft law
to hard law environment cast in national and
supranational laws and regulations, ESG will
continue to remain a top regulatory driver
for the life sciences and health care sector in
2024 with further legislative proposals in the
pipeline, including the proposed EU import
ban on forced labor goods.
Given this “regulatory patchwork rug” and the
constantly evolving regulatory requirements
around ESG, keeping pace is challenging. Since
ESG issues no longer pose only reputational
risks, but also regulatory and civil law risks,
continuous regulatory monitoring and
adaption of policies and procedures (e.g.,
Compliance Management Systems) is key to
cope with these challenges. Strong policies and
procedures will also create synergies with other
ESG related regulations such as the Corporate
Sustainability Reporting Directive (CSRD) and
European Sustainability Reporting Standards
(ESRS) covering the full range of ESG.
Felix Werner
Senior Associate
Berlin
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