As of 1 January 2023, the CSR applies directly to companies that have their head office, principal place of business, administrative headquarters, registered office or branch office pursuant to section 13d of the German Commercial Code in Germany and generally employ at least 3,000 employees (employees posted abroad are also covered). As of 01 January 2024, the figure of 3,000 employees will drop to 1,000. Indirectly, the CSR also has an impact on the suppliers of these companies.

The CSR aims to protect human rights and the environment by identifying and ending risks and violations among companies and their suppliers.

The so-called duties of care are defined in § 3 CSR and are as follows:

1. the establishment of a risk management system,

2. the definition of an internal responsibility,

3. the performance of regular risk analyses,

4. the issuing of a policy statement,

5. the establishment of preventive measures within the own business unit and towards direct suppliers,

6. taking corrective action,

7. the establishment of a complaints procedure,

8. implementing risk due diligence with indirect suppliers; and

9. documentation and reporting.

The CSR also has an impact on smaller companies, such as suppliers that are part of a supply chain. If, for example, the company discovers that the violation of a human rights-related duty has already occurred at a direct supplier, it must immediately take appropriate remedial action. It will therefore be unavoidable that these suppliers also closely examine, evaluate and, if necessary, adjust or optimise their risk management with regard to possible dangers. In this context, certain topics and entrepreneurial actions must also be critically scrutinised.

Suppliers should assume that companies covered by the CSR will make the following demands on them as part of the necessary preventive measures:

(a) the consideration of human rights and environmental expectations when selecting a direct supplier,

b) contractually assuring a direct supplier that it will comply with the human rights and environmental expectations required by the company's management and adequately address them along the supply chain,

c) the provision of training and education to enforce the direct supplier's contractual assurances,

d) agreeing on appropriate contractual monitoring mechanisms and implementing them on a risk basis to verify the immediate supplier's compliance with the human rights strategy.

If a company intentionally or negligently violates the due diligence obligations prescribed under the CSR, a fine can be imposed, which is to be based on the total turnover of the company (up to 800,000 euros or 2 per cent of the annual turnover for companies with a turnover of more than 400 million euros).

In the case of serious violations, companies can also be excluded from public tenders for up to three years.

The Federal Office of Economics and Export Control checks compliance with the CSR and is given comprehensive powers. Among other things, it monitors company reports and investigates complaints submitted. If the authority finds violations of the law or omissions, it can impose fines or exclude companies from the award of public contracts.