In early September, the Federal Cabinet approved an amendment to the German Supply Chain Due Diligence Act (LkSG) intended to ease burdens on companies. The amendment is expected to be passed by the Bundestag at the beginning of 2026. The most significant change: the annual reporting obligation will be removed. Previously, companies with at least 1,000 employees had to prepare and publish an annual report on their compliance with due diligence obligations. This obligation will now be retroactively abolished. Correspondingly, the supervisory authority has already ceased reviewing reports.

Sanction penalties will also be eased: fines will only be imposed in cases of severe violations leading to significant human rights infringements.

However, fundamental due diligence obligations will remain in force. Companies must continue to establish risk management processes, conduct regular risk analyses, and take measures to prevent or mitigate human rights and environmental risks and violations within their supply chains.

The LkSG amendment will come into effect in 2026. Over time, the LkSG will be replaced by European directives: in Germany, the revised Corporate Sustainability Due Diligence Directive (CSDDD) must be transposed into national law by mid-2028. It will initially apply only to large companies – i.e., those with 5,000 employees and €1.5 billion in global net turnover.

Further information can be found on the website of the Federal Ministry of Labour and Social Affairs.