As EU negotiations on the Corporate Sustainability Due Diligence Directive (CSDDD) have been completed and transposition into national law is the next step, legislators and enforcement authorities across EU member states are already taking proactive steps that are in line with its core principles under national laws.
Increasingly, effective supply chain due diligence and anti-bribery efforts become inseparable. And as enforcement actions often reveal, human rights and corruption risks are deeply linked. Recognizing that anti-bribery and supply chain due diligence are also intertwined allows compliance departments to build a stronger and more integrated approach. Using this synergy helps better anticipate complex risks in modern supply chains under both national rules and upcoming EU legislation, such as the CSDDD, which in its revised form guarantees effective and risk-based implementation and enforcement to tackle human-rights and environmental risks and violations while considering corruption risks.
This overall trend can best be illustrated when looking at two European countries: Germany and Italy.
Germany updates supply chain law while still enforcing
A front runner in implementing mandatory supply chain due diligence, Germany is revising its national Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG). The revised act aims to reduce administrative burdens and align the country’s legal framework with the CSDDD.
Despite these changes, the LkSG remains in force, and the Federal Office for Economic Affairs and Export Control (BAFA) continues to enforce the law. Though the reporting obligation under LkSG has been suspended and BAFA has scaled back routine reviews, the authority retains its mandate to investigate and sanction companies where credible indications of severe human rights violations exist. This mandate includes situations involving forced labor, child labor, and other grave human rights abuses within supply chains. BAFA’s enforcement actions underscore the enduring relevance of the LkSG’s core principles, even as Germany shifts toward EU-level harmonization.
While anti-bribery and corruption aren’t directly within the scope of the LkSG, they’re closely connected to human rights risks. Legislators and enforcement authorities recognize this link, as reflected in Recital 36 of the CSDDD and in BAFA’s Guidance on Cooperation in the Supply Chain. Both sources emphasize that bribery and corruption can indicate and intensify underlying human rights risks. Take a supplier caught up in corrupt practices. Their involvement may signal a higher likelihood of labor exploitation or other abuses. So, companies should treat bribery and corruption as important pointers when assessing supply chain risks.
If BAFA uncovers evidence of bribery or corruption during a supply chain enforcement action, this evidence could lead to criminal investigations by the public prosecutor’s offices. This possibility highlights the importance of a holistic approach to due diligence that goes beyond simply meeting minimum legal requirements..
Italy cracks down on exploitation using existing legal framework
Though Italy has not yet adopted a dedicated supply chain law like Germany’s LkSG, Italian enforcement authorities are using existing legal frameworks to carry out targeted crackdowns in certain industries. These actions focus on a range of violations and systemic risks that mirror concerns addressed by the CSDDD.
Investigations are mainly aimed at uncovering alleged labor exploitation (and tax fraud) within the supply chains of companies in high-risk sectors, including companies with suppliers in countries with high levels of corruption.
The enforcement actions consist of investigative inspections, asset seizures, and judicial administration. The judicial administration measures are used to compel companies to actively engage in due diligence across their supply chains, effectively turning the company’s internal governance structure into a mechanism for self-investigation and remediation.
A one-stop-shop approach – where governance, anti-corruption, human rights, and environmental risks are assessed together – can enhance both the efficiency and the effect of compliance programs within a unified compliance framework.
Initial enforcement efforts have concentrated on the logistics and fashion sectors, which have been identified as high risk due to their complex subcontracting chains and recurring labor violations. In response, voluntary supply chain certification systems are being developed – both through agreements between enforcement authorities and relevant stakeholders and through legislative initiatives – to enhance compliance with labor, tax, and social security regulations across these industries.
Due diligence demands an all-round approach
Recent regulatory developments and enforcement trends reflect a growing understanding that human rights and environmental risks often correlate with weak governance and high corruption levels in supplier countries. So, effective business partner due diligence should treat these issues holistically, not in isolation.
A one-stop-shop approach – where governance, anti-corruption, human rights, and environmental risks are assessed together – can enhance both the efficiency and the effect of compliance programs within a unified compliance framework. This integrated model is particularly relevant for companies operating in or sourcing from high-risk regions, where weak governance structures often exacerbate ESG violations. The one-stop-shop approach enhances risk detection and ensures companies are better equipped to meet current national obligations and future EU requirements.
To achieve this holistic approach, compliance departments should break down knowledge silos and foster meaningful collaboration between teams responsible for human rights, anti-bribery, and business partner due diligence. Establishing interoperable systems and conducting joint risk assessments through cross-functional compliance committees can reveal patterns and red flags that might otherwise go unnoticed if departments operate in isolation. In practice, this means sharing data, aligning risk criteria, and developing integrated response protocols.
Integrated compliance takes effort, but pays off
Integrating these programs can be challenging, and overcoming these barriers often requires strong leadership support and clear communication of the benefits. By embedding anti-bribery and corruption indicators into supply chain due diligence, companies can create a more robust and agile compliance framework.
This integrated model supports compliance with current German law and mitigates risks from enforcement actions in jurisdictions like Italy. Beyond immediate compliance, the model also ensures readiness for the more comprehensive requirements expected under the CSDDD, ultimately strengthening the company’s resilience against legal and reputational risks.
Companies that proactively implement a comprehensive business partner compliance framework, including anti-bribery measures and supply chain due diligence, are better positioned to prevent, detect, and respond to a broader spectrum of these risks. This model reduces the likelihood of regulatory and criminal enforcement, and it helps safeguard the company’s reputation, fostering trust with business partners in an increasingly scrutinized market environment.