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Details
- Germany
Germany's Supply Chain Due Diligence Act (LkSG) applies to companies with a head office, principal place of business, administrative seat, or branch in Germany and ≥1,000 employees. This includes foreign companies with German branches.
Deep dive
Introduction
Germany’s Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG) was adopted on July 16, 2021 (BGBl. I 2021 S. 2959) and took effect on January 1, 2023. It requires large companies operating in Germany to implement human-rights and environmental due diligence across their supply chains, with oversight and enforcement by the Federal Office for Economic Affairs and Export Control (BAFA). The Act is grounded in Germany’s National Action Plan on Business and Human Rights and the UN Guiding Principles, and it references specific environmental obligations via international conventions (notably Minamata on mercury, Stockholm on POPs, and Basel on hazardous-waste movements). It initially applied to firms with ≥3,000 employees (2023) and expanded to ≥1,000 (2024). While primarily a due-diligence regime (not an emissions cap), LkSG complements EU sustainability policy by requiring governance, risk analysis, preventive/remedial measures, and public reporting that include environmental risk management—thereby intersecting with corporate net-zero strategies and other EU files (e.g., CSRD/CSDDD) aimed at embedding sustainability in corporate practice.
Reporting requirements
LkSG mandates continuous documentation of due diligence and an annual report covering the prior financial year. Companies must describe risk analysis, environmental and human-rights risks identified, preventive and remedial measures, effectiveness assessment, complaints procedures, and conclusions for future action. The report must be published on the company’s website and kept freely accessible for 7 years, and it must also be submitted to BAFA via its online questionnaire. Statutory timing: no later than 4 months after fiscal year-end (BAFA allowed transitional adjustments, including extensions into 2024/2025 for initial review cycles). Environmental scope is explicitly linked to Section 2(3) LkSG, which incorporates obligations from the Minamata (mercury), Basel (hazardous waste movements), and Stockholm (POPs) conventions—breaches constitute “environment-related” violations under the Act.
Penalties for Noncompliance
BAFA can investigate ex officio or upon complaint, require corrective action, and impose administrative fines. The statute provides for fines up to €800,000, and for companies with >€400 million average annual turnover, up to 2% of worldwide annual turnover. Serious violations can trigger exclusion from public procurement for up to 3 years (subject to “self-cleaning”). BAFA also publicizes enforcement approaches and has adjusted practice as policy evolves.
Current status
As of November 3, 2025, the LkSG remains in force for companies with ≥1,000 employees, but Germany’s federal cabinet approved an amendment on September 3, 2025 to abolish the Act’s annual reporting obligation and to ease sanctionable omissions; the national regime is expected to continue until the EU’s CSDDD is transposed. In line with this political direction, BAFA adjusted its enforcement practice on October 1, 2025, limiting report reviews and refocusing supervision while the legislative changes move through Parliament. Even with the reporting duty slated for removal, BAFA emphasizes it will continue risk-based, ex officio controls of human-rights and environment-related risks under §14 LkSG. Until the amendment is enacted, BAFA’s legacy guidance on the reporting questionnaire remains online as reference material for prior cycles. Companies should therefore maintain core due-diligence systems (risk analysis, preventive/remedial measures, grievance channels) and track the amendment’s passage to confirm when the reporting obligation is formally discontinued.
Resources
Statute (official consolidated text, German): Gesetze-im-Internet — LkSG (§§ and Annexes).
BAFA overview of LkSG & duties (English): scope, obligations, BAFA’s role.
BMZ/BAFA factsheet (English): environmental and human-rights focus overview.
BAFA reporting page (German): questionnaire and instructions for §10(2) reporting.
BAFA guidance hub (German): risk analysis, complaints procedure, cooperation notes.
BMAS official explainer (English): law background and obligations.
