Case Study: How SAP Embeds UBO Discovery Into Supply Chain Due Diligence for LkSG Compliance
The German Supply Chain Due Diligence Act changed what “knowing your supplier” means. SAP built UBO intelligence into the workflow.
The Challenge
Germany’s Supply Chain Due Diligence Act (LkSG) requires companies with over 1,000 employees to identify and mitigate human rights and environmental risks across their supply chains. Penalties reach up to 2% of annual global revenue and exclusion from public procurement for three years.
SAP’s enterprise clients use SAP Ariba to manage supplier risk across global supply chains with thousands of third-party relationships. But LkSG — along with the upcoming EU Corporate Sustainability Due Diligence Directive (CSDDD) — demands something beyond traditional supplier risk scoring: companies must now understand who owns and controls their suppliers, particularly in high-risk sectors and jurisdictions.
The problem is that existing supplier risk tools screen for operational and financial risk. They do not trace ownership chains. A supplier might pass every ESG questionnaire and financial health check, while being controlled by an entity linked to sanctions violations, forced labor, or conflict minerals. Without UBO visibility, supplier due diligence has a blind spot at the ownership level.
The Solution
SAP integrated Zavia.ai’s UBO discovery capabilities into its supply chain risk management ecosystem, adding ownership transparency as a layer within existing SAP Ariba workflows.
How Zavia.ai works differently for SAP:
- LkSG ownership risk layer: When a procurement team evaluates a supplier in SAP Ariba, Zavia.ai provides the full ownership chain alongside the standard risk profile. Compliance teams can see whether a supplier’s UBOs are connected to sanctioned entities, PEPs, or companies operating in FATF grey-listed jurisdictions — without leaving the SAP environment.
- Supplier onboarding gate: SAP clients can configure UBO verification as a mandatory step in the supplier onboarding workflow. A new supplier cannot be approved until Zavia.ai has resolved its ownership chain and confirmed that no UBOs trigger risk thresholds. This prevents non-compliant suppliers from entering the system in the first place.
- Portfolio-level ownership screening: For LkSG annual reporting, SAP clients need to demonstrate they assessed human rights risks across their entire supply base. Zavia.ai can screen the ownership structures of thousands of suppliers in bulk, flagging entities with UBOs in high-risk jurisdictions, opaque ownership structures, or connections to known risk indicators.
- Change-driven re-assessment: When a supplier’s ownership structure changes — acquisition, restructuring, new shareholders — Zavia.ai triggers a re-assessment within the SAP workflow. This converts periodic supplier reviews into event-driven compliance, which is what LkSG actually requires.
The Results
| Metric | Impact |
| LkSG compliance | UBO-level ownership risk added to existing supplier due diligence workflows |
| Supplier onboarding | Ownership verification embedded as a mandatory gate before approval |
| Portfolio screening | Bulk UBO resolution for thousands of suppliers, supporting annual reporting |
| Ongoing compliance | Event-driven re-assessment triggered by ownership changes, not calendar dates |
Why It Matters
LkSG fines are not hypothetical. German authorities have already opened enforcement proceedings. The upcoming EU CSDDD will extend similar obligations to companies across all member states. The compliance gap is clear: companies know their suppliers’ operational and financial risk, but most have zero visibility into who actually owns and controls those suppliers.
By embedding Zavia.ai into the SAP ecosystem, ownership intelligence becomes part of the procurement workflow — not a separate compliance exercise that procurement teams ignore. When a buyer in SAP Ariba reviews a supplier, the ownership chain is right there, alongside the financial health score and ESG rating.
Bottom line:
Zavia.ai adds UBO-level ownership intelligence to SAP’s supply chain risk management, enabling enterprise clients to meet LkSG and CSDDD requirements by embedding ownership verification directly into supplier onboarding, assessment, and monitoring workflows.
